As much as we like to think we can get a good return on our investments in the oil and gas industry, that’s not always the case.
There are plenty of things that we need to keep in mind when looking at the oil sands, natural gas and other commodities.
It’s not just the money, but also the time investment, that makes up a big part of our business.
To help you decide which resources are worth your while, we’re launching a new feature here at the CBC called Tourism Shares.
As we delve deeper into the energy industry, we hope this new resource will help you make better decisions about where to invest your dollars.
We’ve created this handy guide to help you understand the different types of tourism investments that can be made in Canada and the opportunities and risks associated with each.
Tourism Shares Explained tourism shares The value of a tourism share depends on how much value the province of the holder has to offer and how much the holder is willing to pay in exchange for the right to use the resource.
Some provinces offer some form of a royalty or tax break to attract investors to their regions.
In many cases, tourism shares can be used to attract tourism to your area and keep a steady flow of foreign investment in the region.
For instance, Alberta offers a tourism dividend of up to 30 per cent of revenue from the value of the province’s oil sands assets.
The value varies depending on the province and is typically capped at around $2 billion per year.
For Alberta, this dividend is worth around $1.5 billion a year.
If the value is not sufficient to attract the interest of foreign investors, or if the value has declined in value due to a downturn in the resource’s price, the dividend can be reduced by another 30 per 100 million dollars, or 10 per cent, a year from the year before.
In Alberta, for example, the value dropped by nearly $5 billion between 2013 and 2016.
The bottom line is that a tourism stake in Alberta is one of the best investments you can make.
But before you take the plunge, be aware of the risks associated.
The following is a brief guide to the different ways you can invest in the energy sector in Canada.
Capitalization, stock holdings and dividend reinvestment While capitalization and stock holdings are the most common types of investment in Alberta, they’re also the least risky.
This is because, unlike a dividend reinvested from the oil sector, it’s usually paid out over the life of the lease or other ownership interests of the resource (such as land or buildings).
For example, if a resource owner or other person owns more than 1 per cent (or 25 per cent) of the stock in a mining company, that person will receive a 10 per, 25 per or 30 per per cent dividend.
A small portion of a resource’s shareholdings can be sold for cash or other assets.
While a 10-per-cent dividend paid out annually from the leaseholdings of a company’s oil and natural gas assets can be tempting, you should be aware that a portion of the dividends paid to shareholders could end up paying dividends that don’t belong to the company.
For example a 10% dividend paid from a resource that has a high level of net operating loss and an annual loss for three consecutive years would likely be taxable.
And in Alberta the province has a statutory 10 per per, 30 per or 40 per cent tax rate on dividends paid from resource assets.
Taxable dividends can also end up in a company or its shareholders’ bank accounts.
A shareholding can end up receiving a dividend from another company or the province in the form of dividends on a portion or all of its investments.
For more information on taxation of dividends in Alberta and dividend distributions, read Taxable Dividends and Dividend Distributions.
Interest and dividends in resource leases and other ownership rights An interest in the lease of a mineral resource is generally a tax-free dividend.
Interest is generally paid from the proceeds of leaseholds of oil and other minerals, but it’s often paid over the course of the property’s life.
If an asset owner holds a mineral lease, that owner usually will receive an interest from the asset owner, regardless of the value that the lease represents.
Interest on oil and minerals is taxed at 10 per million dollars per year for oil and for all mineral leases.
This tax rate can be waived if an interest in a lease is of an interest-free nature.
If a leasehold has an interest and a person is paying a lease dividend, that interest is taxed in proportion to the amount of the dividend.
For most oil and mineral leases, the tax rate for the interest is based on the amount the interest paid out.
This means that if the interest on a leaseholder’s share of the asset is worth $10 million, then the interest rate for that person is 30 per, 10 per or 20 per cent.
This interest rate applies to all leaseholders of the mineral