About the Extractive Sector Transparency Measures Act (ESTMA)
The Extractive Sector Transparency Measures Act (ESTMA) requires that certain businesses involved in the commercial development of oil, gas and minerals report the payments they make to governments in Canada and abroad. The ESTMA addresses Canada’s commitment, made alongside other countries at the 2013 G8 Leaders’ Summit, to raise transparency and reduce corruption in the global oil, gas and mining sectors.
Businesses that are subject to the ESTMA must publish their payment reports online for at least five years. Academics, non-governmental organisations (NGOs), governments around the world and professionals in the resources sector use these ESTMA reports to access clear and reliable information about such payments.
We (Natural Resources Canada) engaged the provinces and territories, civil society, industry and Indigenous representatives when we developed the ESTMA and after the legislation was in force. Read about this engagement on the Open Government website.
Below is an overview of the ESTMA, including who reports, what and when they report, etc. There are also links to other web pages that contain detailed information about enrolling and submitting a report.
Who reports? What do they report?
The following entities are subject to the ESTMA: A corporation, trust, partnership or other unincorporated organization engaged in the commercial development of oil, gas or minerals directly or through an organization it controls that is:
- Listed on a Canadian stock exchange
- Not listed on a Canadian stock exchange, but has a place of business in Canada, does business in Canada or has assets in Canada and meets two of the following thresholds in one of its two most recently concluded financial years:
- Had at least C$20 million in assets
- Generated at least C$40 million in revenue
- Employed an average of at least 250 employees
If a business meets either of the criteria above, it must enrol with us and report payments if they meet three criteria:
- They are made to a Payee (see Payee section below)
- They relate to the commercial development of oil, gas or minerals
- They total at least C$100,000 in at least one of the following categories:
- Taxes (other than consumption and personal income)
- Fees (including rental fees, entry fees and regulatory charges, as well as fees or other consideration for licences, permits or concessions)
- Production entitlements
- Bonuses (including signature, discovery and production bonuses)
- Dividends (other than dividends paid to Payees as ordinary shareholders)
- Infrastructure improvement payments
Identify and aggregate all the payments made within one of the payment categories to a single Payee. If that amount meets or exceeds C$100,000, it must be included in an ESTMA report. If it’s unclear which category a payment falls into, consider the substance rather than the form of the payment.
Reporting businesses may also make payments to Payees in exchange for no opposition to a project, or so that a project would be allowed to proceed. These social payments are reportable if an extraction project could not proceed without them, or if the timing, nature or extent of these payments are controlled by the Payee.
The “commercial development of oil, gas or minerals” includes exploration and extraction, as well as obtaining or holding a permit, lease or license or other authorization for these activities. This includes the production of crude oil, bitumen and shale oil; natural gas and its by-products; and all naturally occurring metals and non-metallic minerals.
It does not include support services like construction or equipment manufacturing, or post-extraction activities like refining, smelting, marketing, distribution or export.
To be reportable, a payment must be made to a Payee, defined as:
- Any government in Canada or abroad
- A body established by two or more governments
- Any trust, board, commission, corporation, body or authority that exercises a function, power or duty of any government in Canada or abroad (it must have some relation to one of the other two bullets)
Payments made to Indigenous groups and governments in Canada might also be reportable. Read the Payments to Indigenous Payees in Canada factsheet (PDF, 183 KB) for more information.
Payments received by a third party on behalf of a Payee are considered to have been made to the Payee.
There are no reporting requirements for Payees under ESTMA.
A “government” is broadly defined as a Payee, and includes any government in Canada or abroad. This includes federal, provincial, regional, municipal and Indigenous governments, among others. Canada and the European Union use a similar, broad definition, which recognizes that governments around the world come in many forms.
Social and in-kind payments
Social payments may be reportable under the Act if they are directly related to, or a condition of, the commercial development of oil, gas or minerals. Determine into which categories your payments fall based on the facts and circumstances of each payment. Social payments can include capacity-building payments, accommodation payments, infrastructure improvement payments and other payments or in-kind support.
If you can determine the cost of an in-kind payment, that is the value you should report. If the cost is not determinable, report the in-kind payment at fair market value. This includes agreed reallocation of funds for internal changes to internal processes as a condition of the commercial development of oil, gas or minerals. Identify the payment made in kind and include a supplementary note in your report briefly summarizing how the value of the in-kind payment was determined.
Types of ESTMA reports
There are three types of ESTMA reports:
- Individual reports: These are filed annually by a single business, and describe the qualifying payments made to Payees during its last financial year
- Consolidated reports: Some parent companies submit reports that include their own reportable payments made during their last financial year as well as those made by their subsidiaries
- Substituted reports: These are reports that were prepared to meet the requirements of another jurisdiction. Sometimes, you can use these to fulfill your reporting requirements under the ESTMA and reduce your reporting burden. Read the Substitution process and determination page for more information.
ESTMA and Indigenous governments
Read the Payments to Indigenous Payees in Canada factsheet (PDF, 183 KB) to learn how ESTMA defines an Indigenous Payee and which payments you must include in your ESTMA report.
Impact and Benefit Agreements (IBA)
Extractive businesses are not required to disclose impact and benefit agreements (IBA), or other agreements with Indigenous groups. The ESTMA requires extractive businesses to report certain types of payments of $100,000 or more made in relation to the commercial development of oil, gas or minerals. Some of these reportable payments might be included in IBAs and other commercial agreements. Extractive businesses may provide additional information in their ESTMA report about payments (including those to Indigenous governments).
Indian Oil and Gas Canada (IOGC)
Indian Oil and Gas Canada (IOGC) is a special operating agency part of Crown-Indigenous Relations and Northern Affairs Canada. For the purposes of the ESTMA, IOGC would meet the definition of a Payee, as it performs a power, duty or function of government for the Government of Canada. As a result, payments made to IOGC would be reported as payments to the Government of Canada. Include specific amounts paid to the IOGC in the appropriate column of the reporting template or below the aggregated amount reported to the Government of Canada.
Connect with us
Email questions to nrcan.ESTMA-LMTSE.rncan@Canada.ca.
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