Fiscal Incentives: Updating Canadian Exploration Expenses

Expanding the scope of what is considered CEE

PDAC secured a significant victory in the 2016 federal budget when the Government of Canada accepted its request to include certain expenditures related to community consultation and environmental studies as eligible for classification as CEE. PDAC has been undertaking advocacy to secure this legislative change since 2012.

Prior to PDAC advocacy, certain exploration costs associated with community consultation and environmental studies were classified as Canadian Development Expenses (CDE) instead of Canadian Exploration Expenses (CEE). During the current financing downturn, this led some projects to be delayed until hard dollars could be raised to cover costs that are increasingly crucial to achieving both legal and social licenses. These changes now allow companies exploring in Canada to use flow-through funds to finance these important activities, which support responsible exploration.

Subsequently, PDAC has worked with industry associations from across Canada to develop a proposal on how to update the Canada Revenue Agency (CRA) guidelines and bring them into alignment with Budget 2016, and has collaborated with CRA, Natural Resources Canada and Finance Canada to update the 2007 guidance document that helps companies understand what types of exploration activities can be financed using flow-through funds.

While as a result some changes were recently done (Revised CRA Guidelines - January 2017 - 2016-067590-en_1) PDAC will continue to work with CRA to  further clarify what types of exploration expenditures will now be considered eligible as CEE.