How To Understand The Financial Benefits Of A Limited Partnership

Transcription

1 CANADA DOMINION RESOURCES 2008

2 Disclaimer The information contained in this power point is general in nature and is not intended to be considered professional tax advice. Investments should not be made for tax considerations alone. Each individual investor s situation is unique and advice should be received from a qualified tax specialist. The examples in this presentation are based on a number of assumptions and are illustrative of the relevant income tax provisions to a hypothetical investor. The material contained in this presentation is for information purposes only and does not constitute an advertisement or an offer to sell or a solicitation to buy any securities in any jurisdiction. Such an offer can only be made through prospectus. The Offering of Units of the Partnership is made pursuant to its Prospectus dated January 24, 2008 which contains important information, including its investment objectives and strategies, purchase options, and applicable management fees and expenses. Please obtain a copy of the Prospectus and read it carefully before investing. Limited Partnerships are not guaranteed, their values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses all may be associated with limited partnership investments. Every effort has been made to ensure that the information contained herein is accurate, complete and up-to-date. However, no guarantee, either express or implied, is made that the information in this presentation is accurate, complete or up-to-date. The contents of this presentation are for informational purposes only and are not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard.

3 Agenda 1. What is a flow-through share/partnership? 2. The Flow-Through Process 3. Tax Deferred Switchability 4. Tax Strategies 5. Why Invest in Canada Dominion?

4 What is a Flow-Through Share or Limited Partnership

5 Flow-Through Share vs. Partnership Flow-Through Share(s): issued to investors by resource companies to help finance their exploration and development activities in Canada. Flow-Through Partnership: investment in a diversified portfolio of flow-through shares of high quality resource stocks at various stages of exploration and development.

6 Why would I choose a Partnership? 1. Experienced & Professional Management Leaders since Diversification Less risk 3. Simple & Effective Tax Preparation One receipt, one tax guide, one solution

7 The Flow-Through Process

8 Canadian Exploration Expense What is CEE? Canadian Exploration Expenses (CEE) are expenses incurred by Canadian Resource Companies in conducting exploration. The Resource Company will renounce these expenses to the partnership using a federal tax form called T101 (Relevé 11 if the company is conducting exploration in Quebec). The Partnership will flow-through these expenses to the limited partners using a federal tax form called a T5013 (Relevé 15 if the limited partner is a resident of Quebec). Limited Partners residing in any province are eligible for the Canadian Exploration Expense deduction. Unused CEE deductions can be carried forward indefinitely

9 The Flow-Through Process

10 The Flow-Through Process Liquidity Investors Share Transfer

11 Tax Deferred Switchability DMP Resource Class DMP Canadian Dividend Class DMP Global Value Class DMP Canadian Value Class DMP Power Global Growth Class DMP Value Balanced Class DMP Power Canadian Growth Class

12 Dynamic Funds & DMP Ltd. $26.5 billion in AUM Equity Fund Family of the Year 2007 Canadian Lipper Awards Advisor s Choice Fund Company of the Year 2007 Canadian Investment Awards Assets in top two quartiles: 1 Year: 78% 3 Year: 75% 5 Year: 84% As at December 31, 2007 Source: PALTrak

13 Dynamic Managed Portfolios David Taylor MBA, CFA Canadian Value Rohit Sehgal Hons. BA, CFA Canadian Growth Barry Allan MBA High Yield Bonds Noah Blackstein BA, CFA International Growth Chuk Wong MSc, CGA, CFA International Value (As at December 31, 2007) YTD Since Yr Yrs Yrs Yrs Yrs Inception DMP Resource Class n/a 20.4 DMP Canadian Dividend Class Underlying Fund: Dynamic Canadian Dividend Fund DMP Canadian Value Class Underlying Fund: Dynamic Canadian Value Class DMP Power Canadian Growth Class Underlying Fund: Dynamic Power Cdn Growth Class DMP Power Global Growth Class Underlying Fund: Dynamic Power Global Growth Class DMP Global Value Class Underlying Fund: Dynamic Global Value Class DMP Value Balanced Class Underlying Fund: Dynamic Value Balanced Fund Mutual Canada fund Dominion regulations Resources restrict the 2008 presentation Limited Partnership of performance figures until a fund reaches its one-year anniversary. Inception dates (Month/Year) for the funds are: 11/2000¹, 05/2005², 06/1978³, 02/2001 4, 01/2007 5, 02/1992 6

14 Top Performing Resource Fund DMP Resource Class (As at December 31, 2007) YTD Si nce Mth Mths Mths Yr Yrs Yrs Yrs Inception DMP Resource Class S&P/TSX Composite Index Sector Weightings Cash Oil and Gas Other Gold Metals & Minerals 35% 34% 10% 1% 20% Top Ten Holdings: Mirabela Nickel Ltd. Consolidated Thompson Iron Mines Ltd. Goldcorp Inc. Paladin Resources Ltd. Agnico-Eagle Mines Ltd. Aurizon Mines Ltd. Osisko Exploration Ltee Aura Minerals Inc. Yamana Gold Inc. Berkeley Resources Ltd. Weighting: 53.1%

15 Tax Benefits Reduce Taxable Income Take Advantage of Capital Losses Charitable Donations Using flow-throughs for your RRSP OAS Clawbacks Corporate Purchases Beware of Alternative Minimum Tax (AMT)

16 Tax Deductions Initial Investment ($10,000) CEE Deduction $10,000 Other Deductions $630 $10,630 Total $4,933 Total Canada estimated Dominion tax deductions Resources of $4, based Limited on Partnership Ontario resident at the highest marginal tax rate of 46.41%.

17 Breakeven Analysis Ontario Resident Top Tax Bracket (46.41%) Initial Investment ($10,000) Less: Tax Savings: $4,933 At-risk Capital: $5,067 Capital Gains Tax Payable on Redemption: ($2,321) Breakeven $6,598 Breakeven proceeds of disposition of Partnership units represents the amount an investor must receive such that, after paying capital gains tax, the investor would recover such investor s money-at-risk and is calculated as money at risk divided by one minus the product of an assumed marginal tax rate of 46.41% Canada multiplied Dominion by the rate Resources at which capital 2008 gains Limited are Partnership taxed in the year of disposition of the Partnership s units (currently 50%).

18 Breakeven Analysis (all provinces) Highest Marginal Tax Savings Money Breakeven Proceeds Province Investment Tax Rate from Deductions at Risk of Disposition B.C. $1, % $465 $535 $685 Alta. $1, % $415 $585 $727 Sask. $1, % $468 $532 $682 Man. $1, % $493 $507 $660 Ont. $1, % $494 $506 $660 Que. $1, % $513 $487 $642 N.B. $1, % $499 $501 $654 N.S. $1, % $513 $487 $642 P.E.I. $1, % $504 $496 $650 Nfld. $1, % $484 $516 $668 Nunavut $1, % $431 $569 $714 NWT $1, % $458 $542 $691 Yukon $1, % $449 $551 $699 Breakeven proceeds of disposition of Partnership units represents the amount an investor must receive such that, after paying capital gains tax, the investor would recover such investor s money-at-risk and is calculated as money at risk divided by one minus the product of an assumed marginal tax rate multiplied by Canada the rate at Dominion which capital Resources gains are 2008 taxed Limited in the year Partnership of disposition of the Partnership s units (currently 50%).

19 Tax Deductions - Corporate Ontario Corporation Assuming a (36.1%) Marginal Rate Initial Investment ($10,000) CEE Deduction $10,000 Other Deductions $630 $10,630 $3,837 Federal ITC N/A Total $3,837 Corporations considering a placement into a limited partnership are strongly advised to consult with a professional tax advisor prior to making a purchase. Canada Type of Dominion corporation, Resources fiscal periods, 2008 province Limited of Partnership registry, business & income type, all may impact the ability of a corporation to make use of the deductions afforded by the Partnership.

20 Charitable Donations Investment in CDR 2008 $10,000 Donation of Rollover Proceeds $10,000 Tax Benefits Original Investment (CDR 2008) $4,933 Donation (Tax Credits) $4,600 $9,533 Capital Gains Tax Payable ($232) ($1,000 x 50% x 46.41%) Tax Savings (Net) $9,301 After-Tax Cost of Donation ($699) ($10,000 - $9, ) Assumes an ACB of zero at time of rollover. Rollover proceeds are eligible for donation only after holding period has expired. Donations should be made in amounts greater than $1,000 in order to maximize the value of a donation to a registered charity. This estimate assumes an investor is at the highest marginal tax rate in Ontario and assumes the Partnership s rollover assets had an adjusted cost base of $1,000/unit at the time of rollover. Charitable Canada tax Dominion credit based Resources on federal 2008 donation Limited tax Partnership credit of $2,874, provincial tax credit of $1,106 and Ontario surtax reduction of $619 for a $10,000 donation.

21 Contributing to your RRSP Ontario Resident Top Tax Bracket (46.41%) Initial Investment in CDR ($10,000) Less: Tax Savings (46.41%): $4,933 Less: Contribution to RRSP $4,641 Capital Gains Tax ($2,320) After-Tax Cost $2,746 Based Canada on Ontario Dominion resident Resources subject to 2008 highest Limited marginal Partnership tax rate in Ontario (46.41%). Only rollover proceeds from DMP Ltd. are eligible for RRSP contributions.

22 Other Tax Strategies Utilize tax-loss carry-forwards Managing capital gains - Sale of second property, stock, etc. Donating CDR 2008 rollover proceeds - After-tax cost of $0.07 on the dollar Old age security (OAS) - Recapture the clawback RRSP & RRIF meltdown strategies Corporate tax shelter - 100% tax-effective for Corporations (less ITC) It is strongly recommended that investors work alongside a financial and/or tax advisor when making a purchase. Any Canada of the Dominion tax planning Resources strategies 2008 mentioned Limited throughout Partnership this presentation should be examined by a qualified tax advisor before attempting any such strategy.

23 Why invest with Canada Dominion Leader in energy weighted flow-through share investments Average after-tax return of 56.7% for the last 17* partnership offerings Has raised over $1 billion since its inception in 1998 A subsidiary of DundeeWealth Inc., a diversified wealth management company with assets under management and administration in excess of $57.9 billion Average after-tax returns based the net asset value per unit for Canada Dominion Partnerships I through to II. Canada All calculations Dominion are Resources based on Money 2008 at Limited Risk for Partnership an Ontario investor/taxpayer at the highest marginal tax rate and includes all tax savings, interest and capital gains tax where applicable. As at December 31, 2007.

24 The Canada Dominion Advantage Ned Goodman B.Sc., MBA, CFA DundeeWealth Inc. Dean Prodan B.A. (Economics) UTA Asset Management Our Experts in the Field Murray John B.Sc., A.C.S.M., MBA Dundee Resources Ltd. Robert Cohen, B.A. Sc., MBA, CFA Goodman & Company, Investment Counsel Richard Cohen, B.A.Sc., MBA Sr. V.P. (Mining & Exploration) Director Corporate Finance Dundee Securities Patrick Stiles, BA, MBA Senior Analyst UTA Asset Management Robert Klassen. B.Sc., MBA Corporate Finance Dundee Securities Brett Whalen, B.A., CFA V.P. Corporate Finance Dundee Securities

25 The Canada Dominion Advantage Canada s s largest flow-through share platform

26 History of Performance Holding Period Returns NAV at Rollover $ NAV at Rollover $35 $30 $25 $20 $15 $10 $ Holding Period Returns on Money-At-Risk (%) $- I II III IV V VI VII VIII IX X XI XII II II Performance based on NAVPU for each LP at time of rollover into mutual fund. Performance for CDR 2007 based on NAVPU from December 31, 2007.

27 Canada Dominion Resources 2008 Limited Partnership Diversified amongst commodities: 2/3 Energy & 1/3 Mining Diversified amongst issuers: 50% TSX, NYSE, ASE > 80% Publicly Listed Tax Efficient 100% Deductible Targetted Premium 15% - 20%

28 Terms of the Offering Offering: Units of Canada Dominion Resources 2008 Limited Partnership Issue Size: Price: Minimum: Up to $150 million $25 per Unit $5,000 (200 units) Closing: March 14 th, 2008

29 Schedule of Events March 14th, 2008 December 31, 2008 March 31, 2009 December 31, 2009 Prior to July 1, 2010: Closing Tax Deduction Allocation Tax Receipts Distributed Final Date for Exploration Activity Assets transferred to DMP Ltd.

30 Reasons to Invest in Canada Dominion Diversified portfolio of flow-through energy and mining stocks Strong management with proven track record Significant tax benefits Attractive investment environment Multi-class structure allows investors to rebalance their portfolio on a tax-deferred basis

31 Customer Relations Centre: Toronto: Montreal: Calgary: Vancouver: