Financial / Taxation
• Issues & Advocacy
The PDAC’s
Financial and
Taxation Committee works on financial reporting and
taxation issues with the objective of creating a regime that
a) enables investment in mineral exploration
b) applies fair tax policies to the mining and exploration sector
c) fosters financial reporting requirements which are appropriate for
the junior mining industry
August 2009
The PDAC’s submission to the federal Standing Committee on Finance
pre-budget consultations.
Click here. On September 29, 2009, Eira Thomas and Philip Bousquet
appeared before the Finance Committee during its pre-budget
consultations in Edmonton.
International Financial Reporting Standards
(IFRS)
On January 1, 2011, all Canadian publicly accountable enterprises will
be converting to International Financial Reporting Standards (IFRSs).
Here is a list of courses (updated October 2009) and other resources
to help exploration and mining companies convert to the new standards.
August 2008
The PDAC’s submission to the federal Standing Committee on Finance
pre-budget consultations.
Click here.
March 2008
Mineral Exploration Tax Credit (‘super’ flow-through program)
In its February 2008 budget, Canada’s federal government announced that
the Mineral Exploration Tax Credit (commonly referred to as the ‘super’
flow-through program) would be extended by one year to March 31, 2009.
The program, which had been due to expire at the end of March 2008,
provides investors with a 15% credit on flow-through share investments
in grassroots exploration carried out in Canada. Under the existing
look-back rule, funds raised in one calendar year with the benefit of
the credit can be spent on eligible exploration up to the end of the
following calendar year. Therefore, funds raised with the credit during
the first three months of 2009 can support eligible exploration until
the end of 2010.
For more details of the extension of the Mineral
Exploration Tax Credit to March 31, 2009, please follow this
link.
Until all the provincial budgets are finalized, we
cannot reproduce the ‘super’ flow-through brochure in hard copy. We will
keep you updated if there are changes to the provincial tax rate. An
amended version of the brochure in pdf format is
here.
September 2007
PDAC submission to the Finance Committee pre-budget consultations.
Click
here.
Canadian
Exploration Expense
On September 19, 2007, Canada Revenue Agency (CRA) released guidelines
that it will use in determining the tax treatment of the costs of
community consultation, baseline environmental studies, and feasibility
studies.
The announcement represented a successful outcome
of four years of lobbying by the association. In submissions to the
federal government, it had been pointed out that the costs of consulting
with local communities and conducting baseline environmental studies
were an integral part of an exploration program, were becoming requisite
costs of doing business for exploration companies, and were not costs
associated with land title.
The letter informing the PDAC of the CRA’s decision
states the following: “The CRA has been aware of the mining industry’s
interest in this issue; however, to date we have not had many occasions
to consider whether community consultation expenses, environmental study
expenses or feasibility study expenses incurred by a mining exploration
company will qualify as CEE in an actual fact situation. Consequently,
our consideration of this issue has been limited to an overall review of
general principles. For this reason, the CRA can only provide the mining
industry with general guidelines that it will follow in determining
whether these types of expenditures that are incurred by mining
companies at the exploration stage will qualify as CEE. A copy of these
guidelines, which have been prepared in consultation with Natural
Resources Canada and Finance Canada, is included in the attached table.”
Click here for the
table.
Clarification of the term “new mine”
In its
brief to the mines ministers’ conference in August 2006, the PDAC
recommended that the Income Tax Act be modified to define the term “new
mine.” Currently, none exists in the legislation. The PDAC will continue
to push for this clarification, recommending that a new mine be defined
as a resource property on the site of a former mine that has been shut
down or inactive for a continuous period of at least 60 months.
Qualified Environmental Trusts (QETs)
A QET is a trust which fulfills the requirement of financial security
for mine reclamation purposes. Under the Canadian Income Tax Act,
contributions are deductible in the year of contribution. The program
was introduced in the mid-1990s but has not been successful in promoting
the funding of reclamation trusts. The PDAC is supporting an initiative
that is seeking to have the Canadian Income Tax Act amended to make QET
contributions eligible for flow-through share treatment.
Apprenticeship tax credit
The committee is researching the concept of an apprentice tax credit
that would support the employment and training of individuals in the
mineral industry. Enhanced incentives would encourage hiring in high
unemployment areas and could enhance aboriginal engagement in the
industry.
Base metal reserves
The committee plans to examine tax incentives as a way of increasing
base metal exploration. The PDAC also supports the Mining Association of
Canada’s proposed deep drilling tax credit of 20 per cent. |
