Structuring Mining Investments

A key decision for investors in the mining industry is what structures to use for holding 
resource properties, carrying out exploration and development activities, and conducting 
mining operations. 

The most common structures used by investors in mining 
projects in Canada are corporations, partnerships, and joint 
ventures. For direct investments in projects or operations 
outside Canada, Canadian residents can choose to operate 
through a branch of a Canadian corporation or through a 
foreign-incorporated subsidiary; similar options are available to 
non-residents investing directly in Canadian mining operations. 
Alternatively, investments can be made indirectly through 
the purchase of interests in partnerships or shares in holding 
corporations. (While trusts are also an option, they lack the 
flexibility and tax advantages of other structures.)

The decision will depend on the investor’s objectives, 
including the desired return, the intended duration of the 
investment, and whether the investor seeks a controlling or a 
minority interest. Potential tax advantages associated with the 
choice of a particular structure in the particular circumstances 
are relevant to the decision. For example, there may be 
opportunities to defer or reduce Canadian tax liabilities by 
reorganizing resource property holdings or transferring assets 

to more tax-favoured entities. In the case of foreign property 
holdings, tax benefits may be available for certain holding 
arrangements or transactions under an applicable tax treaty.

This section highlights some tax-planning strategies that might 
be considered by Canadian residents and non-residents in 
structuring their mining investments.

Corporate Reorganizations

The ITA contains rules related to tax-deferred corporate 
reorganizations that are applicable to all industries. However, 
certain aspects of these rules are particular to corporations 
carrying on a mining business. In some circumstances, the 
rules limit the type or flexibility of reorganizations available to 
such corporations. One example is the successor corporation 
rules, discussed earlier, which may limit the deductibility 
of resource expenses of a corporation after a corporate 
reorganization. (See 

Deductions, Allowances, and Credits – 

Successor Corporation Rules

.)

© 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