• full cost recognition, including 

a 100% depreciation rate for 
capital costs and a processing 
allowance.

Precious and Base Minerals

Gold is the principal mineral in this 
category currently in commercial 
production in Saskatchewan. Other 
minerals are at the exploration phase of 
development. Producers are subject to 
net profit taxes and royalties under the 
Mineral Taxation Act, 1983.

There is an initial tax holiday for the first 
10 years after the province issues an 
approval certificate. This certificate is 
required before construction of the mine 
can begin. Once the holiday period has 
passed, the following royalties are payable:

• Initial production: The royalty is 

based on 5% of the net profit for the 
first 1 million troy ounces of sales 
or 1 million metric tonnes of sales, 
depending upon the mineral sold.

• Remainder of production: Once the 

initial production is reached (1 million 
troy ounces or 1 million tonnes), the 
royalty is 10% of net profit.

Net profit is calculated as mineral sales 
less mining/milling costs, overhead, 
developing/expanding markets, insurance, 
exploration, depreciation, pre-production, 
reclamation, transportation, and losses 
carried forward. 

There is a capital recovery system so 
that the tax does not apply until pre-
production start-up costs are recovered: 

• Until 150% of initial exploration and 

development costs are recovered, 
there are no royalties payable. 

• Sales in pre-production are offset  

by pre-production expenses (which 
include exploration for 10 years 
prior to production plus design, 

development, and construction  
of the producing mine and mill).

These minerals are not subject to the 
resource surcharge discussed above. 
Also, fuel taxes will not apply to off-
road fuel use or to fuel used in power 
generation at remote sites.

Manitoba

Operators of mines in Manitoba are 
subject to a mining tax on profits from 
their operations under the province’s 
Mining Tax Act. The applicable rate 
increases with increasing revenues 
as shown in Table 8.

In addition, a special refundable tax of 
0.5% is imposed on the operator’s profit 
for the year. The amount of the refund 
depends on the amounts of income tax 
and special tax payable for the year. 

Profits subject to tax under the Mining 
Tax Act are calculated as revenues from 
the sales of mineral products in the year 
less specified expenses, payments, and 
allowances. The deductible expenses 
include:

• costs of mining, milling, smelting, 

and refining;

• insurance;
• marketing costs;
• municipal taxes;
• expenditures on research;
• costs of operations;
• depreciation;
• exploration expenses; 
• approved reclamation expenses; and
• a processing allowance.

Non-deductible items include the 
acquisition cost of a mineral property or 
rights, as well as interest and financing 
costs. An operator may not carry a loss 
back or forward. 

Exploration and Development 

Expenses

Exploration expenditures in Manitoba 
may be deducted at a rate of up 
to 100%. In addition, exploration 
expenditures in a fiscal year that exceed 
the average exploration expenditures 
incurred in the previous three fiscal 
years may be deducted at a rate of up 
to 150%. Pre-production development 
expenses are considered depreciable 
assets and included in the computation 
of depreciation allowance. 

Table 8: Tax Rates Applicable to Profits from Mining Operations, Manitoba as 
at June 30, 2013

Profit for the Year 

Rate

Less than $50 million

10%

$50 to $55 million

10% on the first $50 million

+

65% on the next $5 million

$55 to $100 million

15%

$100 to $105 million

15% on the first $100 million

+

57% on the next $5 million

Over $105 million

17%

© 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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