In this article, we will look at a number of tax and other
developments in the mining sector, with a particular focus on
The flow-through share provisions of the Income Tax Act
(Canada) (ITA) allow a corporation that incurs certain
expenses, including "Canadian exploration expense" (CEE),
to renounce such expenses to an investor who can deduct such
expenses in computing income. In addition, certain CEE incurred in
grass roots mineral exploration and renounced to an individual
investor (other than a trust), will give rise to a 15 per cent
non-refundable tax credit to the investor.
The January 2009 federal budget has extended the eligibility
period of the tax credit for mineral exploration. This tax credit,
which was scheduled to expire on March 31, 2009, will be extended
until March 31, 2010. Furthermore, in light of the look-back
provisions of the ITA, funds raised with the benefit of
the credit in 2010 can be spent on eligible exploration activity
until the end of 2011.
According to the Fraser Institute's 2008/2009 Survey of
Mining Companies, Québec stands as the most attractive
jurisdiction in the world for its mining policies. According to the
survey, Québec has been in the top 10 jurisdictions since
2001, and was considered the most attractive jurisdiction for its
mining policies in both 2007 and 2008.
The 2009-2010 Québec budget announced in March 2009
provides for the extension to the forestry and mining sectors of
the refundable tax credit for manpower training introduced in 2009
for the manufacturing sector. The measure allows an eligible
employer to claim a refundable tax credit for each eligible
employee, equal to 30per cent of eligible training expenditures
incurred regarding such eligible employee during a taxation
In addition, the Québec budget proposes to amend the
Mining Duties Act (Québec) to allow certain
corporations to report their profits or loss in a currency other
than the Canadian dollar (functional currency), in harmony with the
federal measures to allow certain corporations to determine their
income, for income tax purposes, in the functional currency.
Québec's attractiveness is partly due to its generous
incentive program and flow-through share regime under the
Taxation Act (Québec), which permits the
renunciation to individual investors of an additional 25 per cent
for CEE incurred in Québec and a supplementary 25 per cent
for surface mining exploration expenses, for a total of 150 per
cent, and the renunciation to corporate investors of an additional
25 per cent of exploration expenses incurred in the northern
exploration zone. Moreover, provided that certain conditions are
fulfilled, the Taxation Act (Québec) provides for a
mechanism to exempt part of the taxable capital gain realized by or
attributed to an individual (other than a trust) upon the sale of
the flow-through shares.
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.
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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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