canada's mining capabilities

Canada's Mining Capabilities_ March 18_OUTLINE.indd 1 2015-03-19 2:40 PM

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of provincial ownership and decisions by governments to encourage this industrial activity. In Canada, companies are subjected to taxes at three levels: federal, provincial or territorial, and municipal. While this may seem complicated, it does ensure that all levels of government benefit when a mine enters production.

Canada’s Tax RatesFederalCorporate income tax 15%

Provincial/TerritorialCorporate income taxesMining taxes (generally profit-based)

Rates vary from 10% to 16%Rates vary from 10% to 18%

MunicipalProperty tax Varied

Since 2003, Canada’s federal corporate income tax rate has dropped from 29.12% (includes the 1.12% corporate surtax eliminated on January 1, 2008) to 15% in 2014.

Canada’s internationally competitive tax regime features incentives such as the Canadian Exploration Expense (100% deduction), Canadian Development Expense (30% deduction), and a 3-year loss car-ry-back and 20-year loss carry-forward provision. In addition to the existence of a number of provincial/territorial tax and non-tax incentives for mineral exploration, royalties or mining taxes, for the most part, are profit-based rather than based on tonnage or revenue.

A unique feature of Canada’s tax regimes is flow-through shares (FTS). Flow-through shares enable a company to transfer eligible exploration and development expenses to investors. These expenses or de-ductions can be used by investors to reduce their taxable income from Canadian sources. Because the shares carry a tax deduction, they are sold at a premium compared to regular shares, enabling a junior company to raise relatively more funds to continue its exploration activities.

In 2000, the federal government introduced the Mineral Exploration Tax Credit (METC), a 15% income tax credit related to surface or above-surface exploration. The METC works in conjunction with Canada’s FTS mechanism and offers investors a 15% tax credit (reduction of taxes payable) in addition to a 100% write-off of exploration expenses.

Canada has excellent mineral potential, astable and favourable investment climate for

mineral capital, and is open for business.

Source: Natural Resources CanadaAdditional information is available on the Internet at: www.nrcan.gc.ca/mining-materials


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canada's mining capabilities

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