Minimum Mining Tax

The minimum mining tax of an operator 
will correspond to the aggregate of the 
following amounts:

• 1% of the lesser of the operator 

output value at the mine shaft head 
(OVMSH) and $80 million

plus

• 4% of the OVMSH in excess of 

$80 million.

The OVMSH of an operator is generally 
equal to the excess of the gross value 
of the operator’s annual earnings in 
excess of:

• the aggregate of all expenses 

otherwise deductible in calculating 
the operator’s annual earnings if they 
are incurred in the fiscal year and are 
attributable to 
– activities of crushing, grinding, 

sieving, processing, handling, 
transportation, and storage of 
the mineral incurred after the 
mineral substance is brought to 
the first accumulation site and of 
the processing of the products 
obtained, and

– marketing activities of the mineral 

substance and of the processing 
products obtained, 

including general administrative 
expenses incurred by the operator 
and relating to any such activities,

plus

• depreciation allowance that relates to 

mining operation activities from the 
first accumulation site of the mineral 
substance after it is removed from 
the mine,

plus

• a processing allowance.

Where the OVMSH is less than 10% 
of the operator’s gross value of annual 
output from the mine, it will be deemed 
to be equal to such amount.

Mining Tax on Annual Profit

The amount of mining tax on annual 
profit will remain the same except for 
the amendments detailed below.

Processing Allowance

The processing allowance percentage of 
the capital cost of the property will be 
increased as follows:

• from 7% to 10% where the operator 

does not carry out smelting or refining;

• from 7% to 10% where the property 

is used solely in processing ore from 
gold or silver exclusively outside 
Québec;

• from 13% to 20% where the 

property is used to carry out, in 
Québec, smelting or refining of ores 
other than gold or silver.

Where the property may fall into two 
of the above categories, the processing 
allowance will be prorated in accordance 
with the use of the property.

The maximum amount of the processing 
allowance that an operator may deduct 
in calculating its annual earnings from a 
mine it operates will be increased to the 
lesser of:

• the established percentage pursuant 

to the above amendments; and

• the greater of:

– 

75% of the operator’s annual 
earnings from the mine for 
such fiscal year, determined 
without taking into account 
the processing allowance, the 
additional depreciation allowance, 
the additional allowances in 
respect of expenses incurred in 
Northern Québec. 

and

– 

30% of the operator’s OVMSH in 
respect of the mine for the fiscal 
year, determined without taking 
the processing allowance into 
account.

Progressive Rate Based on 
Profit Margin

The applicable fixed tax rate will 
be replaced with a progressive tax 
determined on the profit margin for 
the year as shown in Table 10.

An operator’s profit margin for a fiscal 
year corresponds to the operator’s 
annual profit divided by its gross value 
of annual output.

Integrity Rules

As part of its revision, the government 
will introduce “integrity rules” to 
ensure that operators obey the spirit 
and letter of the law. These integrity 
rules deem the relevant properties 
to be alienated at the lesser of the 

Table 10: Proposed Progressive Rate Based on Profit Margin

Profit Margin

Applicable Rate

Effective Rate at 

Segment Maximum

0% to 35% 

16.00%

16.00%

35% to 50% 

22.00%

17.80%

50% to 100% 

28.00%

22.90%

© 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