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
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