Welcome back to our series on mastering flow-through financing for Canadian mining executives. Earlier posts covered the regulatory basics, how to time a raise around field seasons and tax calendars, how to structure deals to limit dilution, and how to capture critical minerals incentives. All of that work depends on one process that rarely gets the attention it deserves: getting from the closing of a flow-through financing to a valid, properly filed renunciation. Today we’re building that process as a checklist, with a named owner at every step, so nothing falls into the gap between your lawyer, your agent and your finance team.
The most expensive flow-through mistake I’ve seen didn’t involve a single ineligible expense. It involved three smart people who each assumed someone else had filed a form. Legal counsel thought the agent had it, the agent thought the CFO had it, and the CFO (a part-time arrangement, naturally) thought legal had sent it in with the closing documents.
Nobody had. By the time it surfaced, the company was paying a late-filing penalty and explaining the delay to its subscribers. That’s when I stopped treating renunciation as a year-end task and started treating it as a workflow that begins the day the financing closes.
Step 1: Build the Responsibility Matrix at Closing
Before the closing dinner, before the press release, someone should circulate a one-page responsibility matrix. It doesn’t need to be fancy. It needs a task, an owner, a backup, a deadline and the evidence you’ll keep.
| Task | Primary owner | Backup | Deadline anchor | Evidence to retain |
|---|---|---|---|---|
| File T100A (with T100A-CERT if claiming CMETC) | CFO | Legal counsel | End of month following agreement or first use of selling instrument | Filed form, selling instrument, CRA confirmation of SITIN |
| File T100B (subscriber details) | CFO | Agent | As soon as subscriber info is available | Subscriber register, agency agreements, exchange approval |
| File T100C on flow-through warrant exercises | CFO | Corporate secretary | Soon after exercises are known | Exercise records, new TIN confirmation |
| Track eligible spending monthly | Controller / CFO | VP Exploration | Monthly close | Invoices, field reports, CEE/CDE coding |
| Reconcile spend vs. renunciation | CFO | External tax advisor | Before board approval | Signed reconciliation file |
| Approve renunciation | Board / authorized officer | CEO | Before T101A is signed | Resolution or minutes |
| File T101A with T101 slips | CFO | Tax advisor | Month after renunciation is made | Filed forms, proof of delivery |
| File T101C (Part XII.6) | CFO | Tax advisor | Before March of Year 3 | Monthly calculation, payment record |
| File T101B if renunciation must be reduced | CFO | Tax advisor | Before March of Year 3 (look-back) or 30 days after CRA notice | Revised slips, investor communication |
Here’s the practical tip I learned the hard way: the “backup” column matters more than the “owner” column. Owners get sick, go on vacation, or leave the company in October. A backup who knows the file exists is your insurance policy.
Step 2: Turn the Subscription Agreement into a Deadline Calendar
Every date in your flow-through calendar flows from one fact: when the agreement was entered into. Call that Year 1. From there, the dates depend on whether you renounce under the general rule or the look-back rule.
Under the look-back rule, your renunciation must be made in January, February or March of Year 2, with an effective date of December 31 of Year 1. The subscriber must have paid cash before the end of Year 1, and you must deal at arm’s length with that subscriber throughout Year 2. Miss any of those conditions and the look-back rule simply isn’t available.
Under the general rule, you can renounce expenses incurred within 24 months after the end of the month the agreement was signed. The latest renunciation date runs to February of Year 4. That gives you breathing room, but it also gives investors their deductions later, which is why most junior explorers default to the look-back rule.
My calendar for a look-back financing usually looks like this:
- Closing month (Year 1): T100A filed by the end of the following month. Honestly? I file it the same week the first agreement is signed.
- Monthly through Year 2: Eligible spending tracked against the renounced amount.
- January–March of Year 2: Renunciation approved and made.
- Month after renunciation: T101A and T101 slips filed.
- February through December of Year 2: Part XII.6 tax accrues monthly on any unspent balance.
- December 31 of Year 2: Spending deadline. Anything unspent triggers an additional 10% tax.
- Before March of Year 3: T101C filed and Part XII.6 tax paid; T101B filed if the renunciation must be reduced.
One more date belongs on every 2026–2027 calendar. The federal Mineral Exploration Tax Credit and the Critical Mineral Exploration Tax Credit currently apply to agreements entered into on or before March 31, 2027. If you’re planning a winter or early-spring raise, confirm with your advisors whether those credits will still be available before you print the term sheet.
Step 3: Reconcile Before Anyone Signs
This is where most renunciation problems are actually born. The temptation in January is to take the total proceeds, assume the field team spent it all on the right things, and renounce the full amount. Please don’t.
I use a three-way reconciliation. The subscription register tells you the maximum you can renounce to each subscriber. The eligible expenditure ledger tells you what you’ve actually spent (or, under the look-back rule, what you’re committed to spending). The proposed renunciation should never exceed either one.
The ledger review is where the judgment calls live. A few items that get flagged in almost every file I review:
- Overhead dressed up as exploration. Prescribed Canadian exploration and development overhead expenses can’t be renounced, no matter how they’re coded.
- Mining property costs. Claim acquisition costs aren’t renounceable.
- Feasibility and economic studies. Budget 2025 proposed to codify CRA’s long-held position that work on economic viability or engineering feasibility isn’t CEE. If your program crept into PEA territory, separate those costs now.
- Government assistance. Grants and similar assistance generally reduce what you can renounce, and they may require a T101D.
- CMETC eligibility. If you’re claiming the 30% credit, your T100A-CERT had to support that the target deposit is expected to be primarily (more than 50%) critical minerals. Spending that drifted to a different target needs a hard look.
- Provincial allocation. T101A requires you to allocate amounts by province or territory, and provincial credits depend on getting that right.
I’ll admit something here. Early in my career, I signed off on a reconciliation where helicopter costs had been split between two projects using a rough estimate. It wasn’t wrong, exactly, but I couldn’t support the split when asked. Now every allocation gets a written basis before it hits the reconciliation file.
Step 4: Approve the Renunciation, and Watch the “Date of Renunciation” Trap
Once the reconciliation is signed, the board or an authorized officer approves the renunciation. Keep the approval simple: the amount, the rule used (general or look-back), the split between CEE and CDE, the METC/CMETC amounts, and the provincial allocation.
Now the trap. CRA treats the date of renunciation as generally the earliest of when T101A was signed or certified, or when T101 slips were sent to investors. And T101A must be filed in the month following the month the renunciation was made.
So if an eager team member sends draft slips to investors in late January “just so they have them,” your filing clock may have started. I’ve watched this happen, and the frantic scramble that followed wasn’t pretty. Rule of thumb: nothing goes to subscribers until the renunciation is approved and the T101A is ready to file.
Step 5: Check the T100/T101 Package and Keep the Proof
Before anything is sent to CRA, run the package against CRA’s current instructions for the flow-through share program. Forms get updated, and CRA expects the latest versions.
My pre-filing checklist:
- The SITIN or TIN on every T101 form matches the one CRA confirmed in writing.
- A separate TIN exists for warrant exercises and for agreements signed in a different calendar year.
- Total renounced doesn’t exceed proceeds per subscriber, and renunciations go to the original subscriber, never the agent.
- The effective date is December 31 of Year 1 for look-back renunciations.
- T101 slip totals tie exactly to T101A.
- The certification area is signed by an authorized officer.
- T101C and T101D are filed electronically, since CRA accepts those only that way.
Then keep the evidence: filed forms, CRA correspondence, proof of filing, the signed reconciliation, the board approval, and the supporting invoices and field reports. CRA reviews flow-through programs closely, and the time to assemble your audit file is when you file, not when the letter arrives.
Step 6: When the Numbers Don’t Match, Fix Them Formally
Sometimes a program stalls and you can’t spend everything you renounced. The fix isn’t to hope nobody notices. Under the look-back rule, you must file a T101B reducing the renunciation before March of Year 3, with revised slips to the affected investors.
The penalties for getting this wrong compound. Over-renunciations can attract a 25% penalty, Part XII.6 tax keeps accruing on unspent balances, and your investors face reassessment on deductions they’ve already claimed. Most subscription agreements include an indemnity, so their problem quickly becomes yours.
That’s exactly why the reconciliation in Step 3 and the monthly tracking in Step 2 matter. A shortfall you spot in August can often be managed; one discovered in February of Year 3 usually can’t.
If you recognize your company in any of these steps (unclear ownership, last-minute reconciliations, forms nobody’s quite sure were filed), you don’t have to keep carrying it alone. I’ve turned this workflow into a spreadsheet you can use today: the responsibility matrix, a deadline calendar that recalculates from your agreement date, and a Part XII.6 tax estimator. Download it below.
Renunciation isn’t a single form you file in the spring. It’s a chain of tasks that starts at closing: a responsibility matrix with real owners and backups, a deadline calendar anchored to the agreement date, a three-way reconciliation before anyone signs, a disciplined approval process, and a filing package you can defend years later. Get the chain right and flow-through shares do what they’re supposed to do: fund exploration while your investors get the deductions they paid a premium for. Get it wrong and a financing that looked like a win becomes a compliance headache. In our next post, we’ll go deeper into documentation itself, including how to build records that satisfy both CRA and your board without burying a small team in paperwork.