This Tax memo discusses the measures in the March 21, 2013, federal budget that affect the Canadian mining industry. In particular, it focuses on the changes to:
Currently, a taxable Canadian corporation that incurs development-type expenses (such as those incurred in removing overburden, stripping and sinking a mine shaft) for the purpose of bringing a new mine in a mineral resource in Canada into production in reasonable commercial quantities can treat them as Canadian exploration expenses (CEE). Subject to certain restrictions, 100% of the balance in a taxpayer’s cumulative CEE account can be deducted by the taxpayer in a taxation year, or carried forward indefinitely to future taxation years.
The 2013 federal budget proposes to phase out the CEE treatment for pre-production mine development expenses. Instead, these expenses will be treated as Canadian development expenses (CDE), which are deductible on a 30% declining balance basis.