Productivity Mega Deduction Could Reshape Mining Flow-through Financings

The federal government’s proposed Productivity Mega Deduction (PMD) may have significant implications for Canada’s mining sector, particularly for companies that rely on flow-through share financings. (See the latest article “Canada proposes new Productivity Mega Deduction”.)

While much of the discussion surrounding the PMD has focused on immediate expensing of capital property, the draft legislation also introduces 100 per cent deduction for qualifying Canadian development expenses (CDE), which can be renounced through flow-through shares for mining companies. For mining issuers and investors, that change could increase the attractiveness of qualifying CDE in a flow-through financing context.