Archived - Harper Government Announces New Measures to Support Canadian Mining
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March 1, 2015 – Toronto, Ontario – Department of Finance
In a speech to the Prospectors & Developers Association of Canada, Finance Minister Joe Oliver and Natural Resources Minister Greg Rickford today announced the Harper Government’s latest action to support the Canadian mining industry. The Government proposes to extend the 15% Mineral Exploration Tax Credit for investors in flow-through shares for an additional year, until March 31, 2016. The credit was scheduled to expire on March 31, 2015. The Mineral Exploration Tax Credit—referred to as the “lifeblood” of junior mineral exploration—will support the mineral exploration efforts of junior exploration companies. During a challenging global economy, in the struggle to secure capital, it has helped keep investment flowing.
The Government also announced proposed changes to ensure that the costs associated with undertaking environmental studies and community consultations that are required in order to obtain an exploration permit will now be eligible for treatment as Canadian Exploration Expenses (CEE). As CEE, these costs would be immediately deductible for tax purposes and also be eligible for flow-through share treatment. In the case of eligible projects, they could qualify as well for the 15% Mineral Exploration Tax Credit.
CEE treatment recognizes the enormous challenges facing mining and oil and gas companies as they explore for resources: the low probability of success, large capital requirements, and long timeframes before reporting positive cash flow. Given these challenges, immediate tax deductibility makes the exploration stage of the process more financially manageable, enhancing the competitiveness of the Canadian resource industry.
As well, CEE treatment can enable companies to “flow through” their unused deductions to investors using flow-through shares. This provides an additional incentive to investors to purchase a corporation’s shares, a vital incentive given that these companies often take many years to report positive cash flows.
But in the past, environmental studies and community consultations required to pursue an exploration project were not always eligible for CEE treatment. Canadians pride themselves on our country’s strong environmental protections, and meaningful consultation with local residents remains a key plank in the Government’s Responsible Resource Development plan. The Government recognizes that the associated cost of these requirements is part of doing business in Canada, and these changes aim to make Canada an even better place to do business.
With these new measures, the Harper Government is empowering the Canadian mining industry and promoting the exploration of Canada’s mineral resources—creating jobs, growth, and long-term prosperity across the country.
- Since 2006, the Mineral Exploration Tax Credit has helped junior mining companies raise over $5.5 billion for exploration.
- In 2013, more than 250 companies issued flow-through shares eligible for the Mineral Exploration Tax Credit to more than 19,000 individual investors.
- According to KPMG, total business tax costs in Canada are now the lowest in the Group of Seven (G-7)—46% lower than in the United States.
- Bloomberg ranks Canada the second most attractive place in the world to do business.
- Canada is one of a handful of countries in the world with a triple-A credit rating and a stable rating from all the major credit rating agencies.
"Mining is key for Canada's prosperity. About 380,000 Canadian jobs are in the mining and mineral processing industries, with the highest wages and salaries of all of Canada's industrial sectors. When we strengthen this industry, we create jobs, growth, and long-term prosperity from coast to coast to coast. We are doing exactly that by cutting red tape, lowering taxes, and expanding free trade across the globe. Today, we are doing even more, by renewing the Mineral Exploration Tax Credit and expanding Canadian Exploration Expenses. The mining industry has no stronger partner than this government, under the leadership of Prime Minister Stephen Harper."
- Joe Oliver, Minister of Finance
"Today's announcement of our latest measures in support of the mining industry is welcome news for Canadian jobs and economic prosperity. Our government's low-tax approach supports Canada's competitiveness and protects Canadian jobs, including in Northern Ontario. We are extending the Mineral Exploration Tax Credit to provide junior mining companies access to the venture capital they need to finance their exploration activities."
- Honourable Greg Rickford, Canada's Minister of Natural Resources and Minister for the Federal Economic Development Initiative for Northern Ontario
- Backgrounder: Mineral Exploration Tax Credit for Flow-Through Share Investors
- Backgrounder: Canadian Exploration Expense Treatment of Environmental Studies and Community Consultations
Director of Communications
Office of the Minister of Finance
Department of Finance