The 2012 federal budget reduced the scope of certain investment
tax credits ("ITCs"), which are dollar-for-dollar
reductions in taxes payable (not merely reductions in taxable
income) provided for making qualified expenditures. Taxable
Canadian corporations that undertake certain mining sector
activities relating to qualifying minerals1 in Canada
are entitled to claim an ITC equal to 10% of the amount of
qualifying expenditures. Qualifying expenditures are those included
in the taxpayer's pool of Canadian exploration expenses (CEE)
by virtue of being incurred, before the mine is producing in
reasonable commercial quantities, on
"grass roots" exploration to determine the existence,
location, extent or quality of a qualifying mineral deposit in
Canada (exploration expenses); or
activities undertaken in order to bring a new mine in Canada
into production (development expenses).
Expenditures on these activities ("pre-production
expenses") are added to a pool, and the corporation is
entitled to claim an ITC (i.e., a reduction in tax payable) equal
to 10% of the pool balance for the year.
As a result of the 2012 federal budget, the preproduction mining
expenditures ITC will be phased out. The current 10% ITC will
continue to apply for preproduction exploration
mining expenditures (i.e., those described in (1)) incurred in
2012, with the ITC rate dropping to 5% for expenditures incurred in
2013 (and eliminated for subsequent years).2 It will
therefore be advantageous for Canadian mining companies making such
expenditures to incur them before the end of 2012,
in order to get the higher 10% ITC rate. Affected taxpayers should
consider accelerating the timing of such expenditures if possible,
to maximize the tax benefit.
1. Qualifying minerals are diamonds, base or precious
metal deposits, or industrial minerals in Canada that produce base
or precious metals when refined.
2. For pre-production development
expenditures (i.e., described in (2) above), the 10% rate continues
to apply for qualifying expenditures made before 2014, with a
phased-out reduction in later years, subject to limited
The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).