Net current proceeds tax paid by an 
operator accumulates in the operator’s 
cumulative tax credit account (CTCA) and 
is available to offset the net revenue tax 
payable by the operator on revenues from 
the mine. An operator cannot carry back 
the CTCA balance to offset net revenue 
tax paid in prior taxation years, nor can 
an operator use the accumulated credits 
in the CTCA for one mine to reduce the 
revenue tax from other mines. 

Net Revenue Tax 

Net revenue tax is levied at a rate of 
13% on the operator’s net revenue from 
a mine for the year, and can be offset 
by the operator’s CTCA balance for the 
mine at the end of the year. The net 
revenue of an operator is the amount 
by which the total of:

• the operator’s gross revenue for 

the year;

• government grants, subsidies, and 

other assistance receivable in the 
year; and

• the proceeds from the disposition of 

capital assets in the year 

exceeds the sum of:

• the operator’s cumulative 

expenditure account (CEA) balance 
at the end of the previous year;

• the operator’s current operating 

costs for the year;

• capital costs incurred in the year, 

such as capital assets, exploration 
and pre-production discovery costs, 
certain pre-production development 
costs, equipment leasing costs, and 
the cost of inventories;

• the new mine allowance (discussed 

below); and

• the investment allowance for the 

year (discussed below).

If the expenditures exceed the 
revenue receipts at the end of the 
taxation year, the operator’s CEA is 
increased by the net excess amount. 
An operator can carry forward its CEA 
account indefinitely and apply the 
balance in the account to offset future 
revenue receipts.

In computing the allowable expenditures, 
the Mineral Tax Act specifically excludes, 
among other items:

• interest expense,
• royalties,
• hedging losses,
• head office costs not directly related 

to the operation of the mine, and 

• costs of incorporation or 

reorganization.

New Mine Allowance

To encourage investment and new 
mine development in British Columbia, 
the new mine allowance permits 
an operator to claim an additional 
allowance equal to one-third of 
the capital cost of a new mine or 
an expansion of an existing mine 
commencing production in reasonable 
commercial quantities after 1994 and 
before 2016. As a result, an operator 
can offset net revenue by 133% of its 
qualifying capital costs.

Investment Allowance

The investment allowance is intended to 
provide a return on the capital invested 
in the mine by the operator and to 
compensate operators for the non-
deductibility of interest. The computation 
of the investment allowance for each 
particular year of the mine is based on 
the average CEA balance for the year 
and the prescribed rate. 

Alberta

Most mining activities in Alberta are 
conducted on land owned by the Crown 
in right of Alberta and managed by 
the Alberta government. The province 
charges and collects royalties from such 
mining operations in exchange for the 
right to explore for, extract, produce, and 
sell minerals found on Crown land.

Unlike most other provinces, Alberta 
does not have a separate mining 
taxation statute applicable to operators 
of mines on freehold land. Revenues 
from mining operations are taxed 
under the federal and Alberta income 
tax regimes, in the same manner as 
revenues from other business activities 
in the province.

Crown royalties are established by the 
Alberta government, with the rates 
being based principally on the type of 
mineral and the volume of production. 
The Alberta government periodically 
reviews the royalty regulations to ensure 
that the rates remain competitive and 
fair. The latest revision to the regime 
came into effect on January 1, 2011.

The discussion that follows summarizes 
Alberta’s current royalty regime 
applicable to various types of minerals 
under production on Crown land, 
excluding oil and natural gas production.

Metallic and Industrial Minerals 

Other than Coal and Oil Sands

The royalty treatment of metallic 
minerals is more complex than the 
treatment of other minerals.

The rate before payout in respect 
of a mine from which the mineral is 
recovered is 1% of mine mouth revenue 
for the month. After payout, the royalty 
rate is equal to the greater of 1% of 

© 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.

 

Provincial Mining Tax 

|

 49