property’s capital cost and its fair 
market value where:

• a person or partnership ceases to be 

an operator; or

• a property ceases to be used (or 

regularly used for the purposes of 
CCA Class 3, 3A, 4, or 4A) for mining 
operations.

The integrity rules also stipulate that an 
operator and the associated entity will 
be deemed to be one and the same 
person where:

• during a fiscal year, an operator 

alienates, directly or indirectly, all or 
part of the mineral substances and/
or the processing products from the 
operation of a mine in Québec in 
favour of an associated entity;

• the associated entity would be 

considered to be carrying out mining 
operations work if it had itself 
extracted the mineral resources from 
Québec soil; and

• in the view of the Minister of Natural 

Resources (Québec), it is reasonable 
to consider that one of the main 
reasons for the separate existence 
of the operator and the associated 
entity is to reduce the amount of 
mining duties.

Non-Refundable Credit on Account 
of the Minimum Mining Tax

For a given fiscal year, an operator 
required to pay mining duties pursuant 
to its mining tax on its annual profit may 
deduct from its mining duties payable an 
amount equal to the lesser of:

• the amount by which the mining 

tax on the annual profit exceeds 
the minimum mining tax for the 
fiscal year

and

• the cumulative balance on account 

of the operator’s minimum tax at the 
end of the fiscal year.

The amount of the minimum mining 
tax in excess of the mining tax on the 
annual profit may be carried forward 
indefinitely. The non-refundable credit 
on account of the mining tax cannot be 
used in order to allow an operator to pay 
an amount of duties that is lower than 
the minimum mining tax calculated.

New Brunswick

The Metallic Minerals Tax Act imposes 
two forms of mineral tax on operators 
of metallic mineral mines in New 
Brunswick: 

• a 2% royalty based on annual net 

revenue (net revenue tax) and

• a 16% net profit tax.

Mineral tax applies on the operator’s 
combined revenues and profits from 
mining operations in the province.

Net Revenue Tax

The 2% net revenue tax applies to the 
operator’s net revenue for the year. Net 
revenue is the amount of the gross 
income from mining operations for 
the taxation year less allowable costs. 
Allowable costs include the following:

• transportation costs for output sold;
• smelting, processing, and milling 

costs; and

• 8% of the original cost of the milling 

or concentrating assets and 15% 
of the original cost of smelting 
or refining assets (together not 
exceeding 25% of net revenue). 

No deduction is allowed for: 

• the capital cost of property, plant, 

and equipment; 

• capital investment; or 
• depreciation or depletion. 

However, certain leasing costs in 
respect of plant and equipment may be 
deductible up to a specified amount.

A two-year tax holiday from the net 
revenue tax is available for a new mine, 
subject to government approval.

Net Profit Tax

Net profit tax is levied at a rate of 16% 
on the operator’s net profit for the year 
in excess of $100,000. Net profit is the 
amount of gross income from mining 
operations for the taxation year less 
allowable costs. Allowable costs include 
the following:

• transportation costs for output sold;
• underground and aboveground 

expenses of the mine;

• salaries and wages of persons 

employed in the mining operations;

• smelting, milling, and processing 

costs;

• insurance;
• real property tax;
• a depreciation allowance (5% to 

100%) in respect of assets used in a 
new mine or processing plant (or in 
an expansion of a mine or processing 
plant, in certain circumstances);

• an allowance in respect of the cost 

of other undepreciated assets (up 
to 33%);

• the amount of net revenue tax before 

tax credits allowed (discussed below);

© 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 

|

 61