Canadian Government Announces Mining Tax Changes

On March 1, 2015, Canada's Department of Finance issued a new release announcing two mining-sector changes to the Income Tax Act (Canada) ("ITA").

CEE Expanded to Include Certain Costs of Environmental Studies and Community Consultations

Many expenditures made by mining companies that are not on depreciable property for tax purposes fall into one of two categories of expenditures unique to the natural resource industry: "Canadian exploration expense" (CEE) or "Canadian development expense" (CDE). Essentially, CEE amounts can be 100%-deducted in the year they are incurred, while CDE amounts are deducted at the rate of 30% per year on a declining balance basis.

CEE is essentially limited to most expenses incurred for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada (certain "pre-production development expenses" incurred to bring a new mine into production are being transitioned from CEE to CDE under