The Canadian federal government announced two new tax measures to support the Canadian mining industry on March 1, 2015.
Extension of Mineral Exploration Tax Credit
The government proposes to extend the Mineral Exploration Tax Credit (METC) available to individual investors in flow-through shares for an additional year. Under the proposal, the METC, which was previously scheduled to expire on March 31, 2015, will be available to individuals who subscribe for flow-through shares pursuant to agreements entered into on or before March 31, 2016. The METC generally provides such individuals with a tax credit equal to 15% of certain specified mineral exploration expenses that are incurred in Canada and renounced to flow-through share investors. The extension of the METC for one year is consistent with prior federal budgets, and presumably this announcement was made on March 1, 2015, outside of the budget context because the METC would otherwise expire before the release of the 2015 federal budget (which has been delayed until at least April).
Expansion of qualifying Canadian Exploration Expenses
The government also announced a proposal which would provide that costs associated with undertaking environmental studies and community consultations that are required in order to obtain an exploration permit or licence will now be eligible for treatment as Canadian Exploration Expenses (CEE). Prior to this proposal, in certain circumstances such costs may have been treated as part of the cost of the exploration permit or licence, rather than qualifying for CEE treatment. As CEE, the costs would generally be 100% deductible to resource companies in the year incurred and would be eligible to be renounced to investors in flow-through shares and will qualify for the METC where the environmental studies and community consultations are related to qualifying exploration projects.
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.
Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.
Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
