Dear Clients and Friends,
In an attempt to encourage the exploration of minerals essential to the development of environmentally friendly technologies, the government has introduced an enhanced tax credit on critical minerals. The 2022 Federal Budget has recognized that critical mineral mining projects are linked to various challenges, including volatile prices and extensive regulatory processes that place increased risk on carrying out mining procedures. Therefore, the new 30% Critical Mineral Exploration Credit provides greater incentive to invest in mining activity.
How does the credit work?
The credit would apply to expenditures renounced under eligible flow through share agreements entered into after April 7, 2022, and on or before March 31, 2027. Eligible expenditures would not benefit from both the Critical Mineral Exploration Tax Credit and the existing Mineral Exploration Tax Credit, which is equal to 15% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors.
What types of minerals apply?
Only specified minerals are eligible for the 30% Critical Mineral Exploration Tax Credit, including copper, nickel, lithium, cobalt, graphite, rare earth elements, scandium, titanium, gallium, vanadium, tellurium, magnesium, zinc, platinum group metals and uranium. In order to qualify for the enhanced credit, the exploration expenses must be incurred as part of an exploration project in connection with these specified minerals.
Clearhouse LLP continues to provide our clients with knowledge on tax incentives related to the Canadian mining industry. Please do not hesitate to contact us at info@clearhouse.ca or (647) 969 7382 if you have any questions.
Kindest Regards,
Your Clearhouse LLP Team