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