Canada

Harper Government Announces New Measures to Support Canadian Mining

March 02, 2015 10:35 AM

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.

Quick Facts

  • 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.

 

Quotes

"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


 src:news.gc.ca

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