Budget 2016: Canadian Resource Taxation Proposals

In Budget 2016, the Government proposed to extend the "super flow-through share" program for another year. The extension comes as welcome relief to members of the junior resources community in light of the uncertainty that arose from the contents of the "Mandate Letter" sent by the Prime Minister to the Minister of Finance late last year. The Mandate Letter indicated that it was a priority of the Government to "[d]evelop proposals to allow a Canadian Exploration Expenses tax deduction only in cases of unsuccessful exploration and re-direct any savings to investments in new and clean technologies". It was unclear to the tax community how this priority would be reconciled with the current rules in the Income Tax Act (the "Tax Act") relating to the deductions and credits that may be claimed in respect of resource expenses.