On Sunday March 1, 2015, the Honourable Joe Oliver, Federal
Minister of Finance addressed the Prospectors & Developers
Association of Canada ("PDAC") at the annual PDAC
Convention in Toronto and announced certain proposals aimed at
bolstering Canada's junior mining industry. First, the
Government has announced that it intends to extend the 15% Mineral
Exploration Tax Credit ("METC") for flow-through share
investors for an additional year. The METC was scheduled to expire
on March 31, 2015. The METC was first introduced in 2000 as a
temporary measure which expired in 2003. Since 2003, the Department
of Finance has extended the METC annually, one year at a time.
The Government has also modified its previous position with
respect to the types of expenses that will qualify as Canadian
exploration expenses ("CEE"). Expenses which qualify for
CEE treatment are 100% deductible in the year they are incurred.
Additionally, certain types of CEE may be renounced to investors
pursuant to flow-through share agreements which enable junior
mining companies to raise capital and fund exploration programs. In
a letter to PDAC dated September 19, 2007, the Canada Revenue
Agency ("CRA") provided certain guidelines in determining
whether certain expenses incurred at the exploration stage
qualified as CEE. In that 2007 letter, the CRA took the position
that environmental assessments and community consultations
undertaken to meet a legal requirement to obtain a permit would not
be eligible for CEE treatment as these costs are not incurred for
the purpose of determining the existence, location, extent or
quality of a mineral resource in Canada.
In his speech, Minister Oliver announced the government's
intention to modify the definition of CEE contained in the Income
Tax Act (Canada) to provide that effective March 1, 2015, the costs
associated with undertaking environmental studies and community
consultations as a pre-condition to obtaining a licence or permit
to explore will qualify as CEE.
These proposed tax measures are welcome particularly since many
mining companies are facing challenges in securing capital.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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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