Non-residents are subject to federal
withholding tax on payments received
from Canadian residents. The payer
withholds tax on the payment at a rate
specified under the ITA or at a reduced
rate as provided by an applicable
tax treaty.
Canadian residents may be entitled
to claim a foreign tax credit against
their federal income tax liability for
taxes paid or payable to a foreign
jurisdiction.
Capital Gains
A disposition of capital property may
give rise to a capital gain, 50% of
which is included in income as a taxable
capital gain.
Utilization of Losses
There are two types of losses for
Canadian tax purposes, non-capital
losses and net capital losses. Non-
capital losses are business or property
losses that may be carried back for
3 taxation years or carried forward for
20 taxation years to be applied against
income from any source.
Capital losses are losses incurred on
a disposition of capital property. One-
half of such losses (allowable capital
losses) may be deducted against the
taxable portion of capital gains realized
in the year, with any excess being
carried back or forward as a net capital
loss. Net capital losses may be carried
back for 3 years or carried forward
indefinitely, but may be deducted only
against capital gains.
There is currently no tax consolidation or
group relief in Canada. The losses of one
corporation in a corporate group cannot
be deducted against the income of
another corporation in the group in the
tax returns of the corporations. There
are various reorganization techniques
that allow corporations to utilize losses
within a corporate group.
The Canadian tax system provides
corporations in the mining sector with
flexibility in utilizing non-capital losses
before they expire by allowing an
elective deduction of qualifying resource
expenditures.
Canadian-resident individuals are taxed at graduated rates
based on federal and provincial tax brackets. Table 3 shows
the maximum federal and provincial income tax rates and the
highest tax brackets for each province and territory for the
2013 calendar year.
Table 3: Maximum Federal and Provincial Personal Income Tax Rates as at June 30, 2013
Federal Rate
(%)
Highest Federal Tax
Bracket ($)
Provincial Rate
(%)
Highest Provincial Tax
Bracket ($)
British Columbia
29.00
135,054
14.70
104,754
Alberta
29.00
135,054
10.00
Flat rate
Saskatchewan
29.00
135,054
15.00
122,589
Manitoba
29.00
135,054
17.40
67,000
Ontario
29.00
135,054
13.16
509,000
Québec
29.00
135,054
25.75
100,000
New Brunswick
29.00
135,054
14.30
126,662
Nova Scotia
29.00
135,054
21.00
150,000
Prince Edward Island
29.00
135,054
16.70
63,969
Newfoundland and Labrador
29.00
135,054
13.30
67,496
Yukon
29.00
135,054
12.76
135,054
Northwest Territories
29.00
135,054
14.05
128,286
Nunavut
29.00
135,054
11.50
135,054
Note: Income above the amount listed in the highest federal tax bracket column is taxed at the rate provided in the table. Ontario, Prince Edward Island, and
Yukon also impose surtaxes. The maximum surtax rate is 56% in Ontario, 10% in Prince Edward Island, and 5% in Yukon. Accounting for the surtaxes, the
highest marginal rate is 20.53% in Ontario, 18.37% in Prince Edward Island, and 13.40% in Yukon. Québec taxpayers receive an abatement that reduces the
highest-bracket combined rate to 49.97%. New Brunswick increased its highest tax rate to 17.84% from 14.30% effective July 1, 2013. The 2013 British
Columbia budget proposed to introduce a temporary top bracket with a tax rate of 16.8% applicable to earned income over $150,000. The proposed tax bracket is
intended to apply effective January 1, 2014 and expire on December 31, 2015.
© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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A Guide to Canadian Mining Taxation