Capital Cost Allowance for 

Industrial Mineral Mines

Industrial mineral mining operations are 
excluded from the federal mining tax 
system unless the industrial mineral 
qualifies as a mineral resource, which 
includes potash. The term “industrial 
mineral” is not defined in the ITA 
but is generally understood to mean 
non-metallic minerals capable of being 
used in industry. Some of the most 
common industrial minerals include 
gravel, sand, potash, sulphur, graphite, 
clay, and asbestos. The Minister of 
Natural Resources (Canada) may certify 
a non-bedded industrial mineral as a 
mineral resource. As a result, industrial 
mineral mines will primarily include only 
bedded deposits. 

The taxation of the operating income 
and capital gains associated with the 
production of industrial minerals that 
do not qualify as mineral resources 
is similar to the general taxation of 
business income under the ITA.

The CCA provisions apply to the capital 
cost to the taxpayer of an industrial 

mineral mine that is not a mineral 
resource, and to a right to remove 
industrial minerals from an industrial 
mineral mine. The deductible amount 
in a taxation year is calculated in 
accordance with the Regulations. 

The applicable CCA rate depends on 
whether a taxpayer has been granted 

Calculation of ACCA

A corporation incurs capital costs of $100 million on Class 41(a) and 41(a.1) 
assets to bring a mine into production. In the year of acquisition of the assets, 
the corporation does not claim any CCA. In the first year of operation, the mine 
earns $40 million. The corporation may claim CCA of $25 million, so that its 
income from the mine is $15 million and its UCC balance is $75 million. It can 
then claim an additional deduction of $15 million, reducing its income to nil and 
the UCC balance to $60 million.

EXAMPLE 4

© 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