Mining Taxation in Canada

As a result of the long-standing recognition of the particular economic nature of mining, the three levels of taxes levied on the mining industry are unique.

Mining is a highly cyclical and capital-intensive industry with a long lead time between initial investment and commercial production. Accordingly, the federal and provincial income tax and provincial mining tax systems treat exploration and other intangible mining expenses generously, allowing mining companies to recover most of their initial capital investment before having to pay a significant amount of taxes. The income tax regimes also include generous loss carry-over rules that help mitigate the negative financial effects of fluctuating prices. Unlike in other countries, provincial/territorial mining taxes, mining royalties, and mining land taxes are based more on net production profits than net smelter return.

While Canada's mining taxation regimes have been stable for years, they are not static. They keep up with important trends in the industry such as globalization, more holistic environmental and social responses, increased Aboriginal participation in mining, and the optimization of recycling. Changes are always implemented through a transparent consultative process to ensure companies starting new projects are aware of the tax rules that affect them before they commit large amounts of capital.