Saskatchewan

The tax regime applicable to production 
from mining operations in Saskatchewan 
is a patchwork of statutory rules, 
regulations, and levies. In simple terms, 
the regime can be described as a 
combination of net profit taxes, royalties, 
and minimum taxes, plus a surcharge on 
sales from mining production.

This group of taxes is intended to allow 
the province to reap the benefits of a 
profitable industry, based on the profit 
taxes levied, while ensuring that during 
economic downturns, when the industry 
may be less profitable or not profitable 
at all, the province will still be entitled to 
collect taxes on sales of the output from 
producing mines.

Saskatchewan’s mining tax legislation 
is contained in the Mineral Taxation 
Act, 1983. The specific levies to which 
a particular mining operation may be 
subject vary according to the type of 
minerals produced, as set out in the 
statute and regulations that apply to 
that area of production. These levies 
may be reduced by certain legislated 
allowances, deductions, tax credits, or 
targeted incentives.

Saskatchewan formerly imposed a 
capital tax on long-term financing and 
shareholder equity of corporations 
carrying on business in the province; 
however, that tax was eliminated 
effective July 1, 2008. Currently, 
producers in Saskatchewan’s mining 
industry are subject to a resource 
surcharge of 3% of their resource sales, 
which is not a capital tax but is levied 
under Saskatchewan’s Corporation 
Capital Tax Act. The resource surcharge 

is reduced for corporations with assets 
of less than $100 million, based on 
the corporation’s balance sheet as 
determined by its income tax accounts.

The key elements of Saskatchewan’s 
mining tax regime are described briefly 
below for five categories of production: 
potash, uranium, coal, diamonds, and 
precious and base metals.

Potash

 

Potash is a significant source of 
provincial revenues from mining 
production in Saskatchewan.

Under the Mineral Taxation Act, 
 1983, there are three taxes that 
apply to potash mining operations 
in Saskatchewan: 

• royalties, 
• base payment production tax, and 
• profit tax.

For profitable operations, the 
government relies primarily on the 
profit tax; however, the combination 
of the resource surcharge, royalties, 
and base payment ensures that 
the province collects a minimum 
amount from the development of 
potash deposits and from sales from 
production of the mineral.

Royalties

Potash producers are charged a Crown 
royalty payable to the province that 
varies between 2.1% and 4.5% of the 
sale value, depending on the grade of 
the ore and the value of production 
on Crown land (government-owned 
mineral rights). 

Base Payment Production Tax

Operators of potash mines are the only 
producers in the province subject to a 
base payment tax. The base payment is 
a monthly payment based on estimated 
sales for the calendar year. 

The province will receive a minimum 
amount of tax ranging between 
$11.00 and $12.33 per K

2

O tonnes 

sold. There is a holiday from the base 
payment tax for the first 10 years 
for new mines or new production 
capacity expansions in excess of 
122,000 K

2

O tonnes per year.

Profit Tax

The net profit tax is based on the 
profit from the mine operation and not 
profits or losses from other activities 
of the producer.

The rate of tax is based on the 
mine’s profit per tonne sold (indexed 
for inflation) as shown in Table 7. For 
new entrants to the industry, the tax 
base for calculating the net profit 
tax payable is 75% of total sales 
for the year up to a maximum of 
1 million K

2

O tonnes. (Sales in excess 

of the maximum are not subject to 
additional profit tax.) All producers 
are subject to a tax floor of 35% of 
total sales.

Table 7: Net Profit Tax Rates 
Applicable to Potash Producers 
in Saskatchewan as at June 30, 2013

Profit per K

2

O tonnes sold

Rate

$0.00 to $64.16

15%

Over $64.16

35%

© 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 

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