On March 21, 2013, the Minister of Finance tabled the 2013
federal budget, Economic Action Plan 2013. There are announced
changes which will be of particular interest to the mining
Phasing Out Tax Preferences for Capital Expenditures in
the Mining Sector
Economic Action Plan 2013 proposes to phase out the accelerated
capital cost allowance for capital assets used in new mines and
major mine expansions and to reduce the rate at which
pre-production mine development expenses may be deducted for tax
In 2006, the Government committed to examine opportunities to
make the tax system more neutral across sectors to help ensure that
investment is directed toward its most productive uses. The
Government further committed in 2009, along with other G-20
countries, to "rationalize and phase out over the medium term
inefficient fossil fuel subsidies." In support of these
commitments, the Government took action in Budget 2007 and Budget
2011 to phase out all tax preferences for oil sands producers
relative to the conventional oil & gas sector. In addition,
Economic Action Plan 2012 announced the phase-out of the Atlantic
Investment Tax Credit for the oil & gas and mining sectors.
As a first step in making the tax system more neutral between
mining and other industries, Economic Action Plan 2012 announced
the phase-out of the Corporate Mineral Exploration and Development
Tax Credit. Economic Action Plan 2013 takes further action toward
this objective. It proposes to phase out tax preferences for
capital expenditures in the mining sector by aligning the deduction
rates of capital assets in the mining sector with those available
in the oil & gas sector: the accelerated capital cost allowance
for capital assets used in new mines and major mine expansions will
be phased out; and the deduction rate for pre-production mine
development expenses will be reduced.
These measures will improve the neutrality of the tax system and
the allocation of investment and capital within the Canadian
economy. Actions taken by the Government since 2006, including
corporate income tax rate reductions and the elimination of the
federal capital tax, have increased the competitiveness of
Canada's business tax system, including for the mining
The alignment of deduction rates in the mining sector with those
available in the oil & gas sector will apply to the mining
sector generally, including coal producers. These measures
constitute further action that the Government is taking in support
of its G-20 commitment.
Supporting Junior Mineral Exploration
Economic Action Plan 2013 proposes to extend the 15-per-cent
Mineral Exploration Tax Credit for flow-through share investors for
an additional year.
The 15-per-cent Mineral Exploration Tax Credit helps junior
mineral exploration companies raise capital by providing an
incentive to investors in flow-through shares issued to finance
mineral exploration. Over recent years, it is estimated that the
credit helped junior mining companies raise an average of about
$800 million annually in new financing for grassroots exploration.
This credit is in addition to the deduction provided to the
investor for the exploration expenses "flowed through"
from the company that issues the shares.
The credit is scheduled to expire on March 31, 2013. However,
given the ongoing economic uncertainty and to support the mineral
exploration efforts of junior mining companies, Economic Action
Plan 2013 proposes to extend the credit for an additional year,
until March 31, 2014.
It is estimated that the extension of this measure will result
in a net reduction of federal revenues of $100 million over the
2013-14 to 2014-15 period.
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The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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