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Mineral Exploration Tax Credit
24 August 2011
Baker Lake, Nunavut
The Mineral Exploration Tax Credit helps companies raise capital for mining exploration by providing a tax incentive, stimulating investor interest in flow-through shares issued to finance exploration. Flow-through shares allow companies to renounce, or "flow-through," tax expenses associated with their Canadian exploration activities to investors, who can deduct the expenses from their taxable income. The mineral exploration tax credit is an additional benefit, available to individuals who invest in flow-through shares, equal to 15 percent of Canadian mineral exploration expenses. These shares are particularly beneficial to start-up corporations that do not have enough taxable income to benefit from tax deductions themselves.
The Government introduced the mineral exploration tax credit in October 2000 as a temporary measure to moderate the impact of the global downturn in exploration activity on mining communities across Canada. Originally scheduled to expire on December 31, 2003, the expiry date was extended in Budgets 2003, 2004, and 2006 through 2010.
In support of the economic recovery, Budget 2011 extends the eligibility for the mineral exploration tax credit for one more year, to flow-through share agreements entered into on or before March 31, 2012. This extension will help companies continue to raise capital for mineral exploration, sustain and create jobs in the Canadian mining industry and protect mining communities affected by long-term challenges.
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