deduction is completely discretionary;
the operator can claim the full amount
in the year incurred or carry forward the
unclaimed expenditures indefinitely.
Depreciation Allowance
An allowance for depreciation may
be claimed in respect of depreciable
property. The rates for 2013 are shown
in Table 9.
The allowance for new and existing
mining assets is discretionary except
during a period of exemption for a new
mine or a major expansion of an existing
mine (see below), when a deduction
of 30% or 15%, respectively, must
be taken. Similarly, the allowance for
processing assets is discretionary except
during a period of exemption, when a
deduction of 15% must be taken.
Asset Rehabilitation Expenses
The Mining Tax Act provides that
reclamation expenses are deductible
in the year in which such expenses are
incurred. There is no provision for a
carryforward or carryback. However, as
a matter of administrative practice, the
Ministry of Finance (Ontario) may, in
certain circumstances, allow the mining
operator to carry reclamation expenses
back to the last full year of commercial
production.
Processing Allowance
An annual processing allowance
deduction may be claimed. The
processing allowance is computed
as follows:
• Where the output has been
processed in a concentrator
located in Canada and owned by
the operator at the end of the year,
the processing allowance is equal to
8% of the cost of these processing
assets.
• Where the output has been
processed in a concentrator and a
smelter both of which are located in
Canada and owned by the operator
at the end of the year, the processing
allowance is equal to 12% of the cost
of these processing assets.
• Where the output has been processed
in a concentrator, a smelter, and a
refinery all of which are located in
Canada and owned by the operator
at the end of the year, the processing
allowance is equal to 16% of the cost
of these processing assets.
• Where the output has been
processed in a concentrator, a
smelter, a refinery, and a semi-
fabricating plant all of which are
located in Northern Ontario and
owned by the operator at the end of
the year, the processing allowance
is equal to 20% of the cost of these
processing assets.
An operator that does not own
processing assets and sells output that
has been processed by another person
on behalf of the operator is entitled to
claim a processing allowance equal to
15% of the operator’s profit for the year.
An operator that owns processing
assets and sells processed output
in a year may claim a processing
allowance of not less than 15% of the
operator’s profit and not more than 65%
of that profit.
No processing allowance is allowed
in respect of processing carried on
outside Canada.
Tax Exemption for a New Mine
or Major Expansion of an
Existing Mine
An operator that starts up a new mine
or undertakes a major expansion of an
existing mine is entitled to a mining tax
exemption. The exemption covers the
36 months commencing from the time
the new or expanded mine comes into
commercial production to a maximum of
the first $10 million of profits.
Remote Mine Incentives
Special incentives are provided for
mining operations in remote areas of the
province. Where a new mining operation
is certified as a remote mine, the tax
exemption referred to above is extended
Table 9: Depreciation Rates for Depreciable Mining Assets, Ontario
as at June 30, 2013
Asset Category
Rate
Basis
New mining assets
30%
straight-line basis
Other mining assets
15%
straight-line basis
Assets acquired before the
commencement of production
of a new mine or from a major
expansion of an existing mine
100% but not in excess
of the amount of profit
from the mine in the year
Processing and transportation
assets
15%
straight-line basis
Social assets
0%
n/a
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A Guide to Canadian Mining Taxation