Proven Flow Through Process Benefits All Parties

PearTree Financial’s flow through donation financing structure is designed to help major gift charitable donors in Canada significantly reduce their after-tax cost of giving and to ensure that the donor’s full pledge amount is gifted to the recipient charity.

The flow through donation format PearTree has been following since 2007, PearTree’s flow through donation format has benefited all parties in the flow through donation universe, including Canadian resource companies, charities, donors, and investors. It should be noted, our format does not defer, circumvent or avoid any tax that would otherwise be payable. In fact, the net result of this flow through financing activity is of significant social benefit to Canada in the way of better funded charities and a strengthened natural resource industrial sector.

As shown in the illustration above,  the process begins with the donor subscribing for flow through shares thereby accessing the associated Canadian Exploration Expense (CEE) and investment tax credit benefits. The next step is for the donor to gift the shares to their chosen charity. The charity then sells the shares to an institutional investor, arranged through PearTree, to receive their funds for which a tax receipt is issued to the original donor. Because all three steps must take place or the transaction cannot be completed, all funds are held in escrow until the completion of the transaction. In the event the transaction is not completed for any reason, all funds are returned to the donor.

PearTree provides a seamless, easy, and efficient turnkey service for donors and charities. Donor and charity participation requires a non-binding registration of interest followed by a few minutes of step by step document signing once the specifics of a transaction are presented.

PearTree’s highly efficient flow through financing process includes working with:

  • the broker/investment banker community to source appropriate flow through financings;
  • the legal and accounting tax community providing tax and accounting analyses used to advise respective donor clients in tailoring the flow through tax benefits to best suit donor needs; and
  • the tax authorities including CRA and Revenu Québec in confirming tax policy and audit position by securing advance tax rulings.

PearTree Financial Services Ltd. fulfills all capital markets related functions through PearTree Securities Inc., its affiliated Exempt Market Dealer.

Donors and charities are provided with a Closing Book, including a tax opinion from Wilson Vukelich LLP confirming the tax consequences of the transactions and that the transactions conform to and are consistent with the Canada Revenue Agency (CRA) ruling precedents. The resource company and the charity provide tax reporting directly to the participants. PearTree also reports to the participants as required by the tax shelter rules in the Income Tax Act.

imagine

Peartree Financial Services is proud to be an Imagine Canada Caring Company. As such, we invest a minimum of 1% of pre-tax profit to strengthen Canadian communities and contribute to a vibrant, healthy society.

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