• royalties or rentals paid to other 

parties for ore extracted within the 
province; and

• an allowance in lieu of interest equal 

to 8% of the undepreciated balance 
of depreciable assets.

In addition, a special deduction is 
allowed for 150% of each dollar of 
eligible exploration expenditures, other 
than expenditures claimed as pre-
production development costs, incurred 
by the operator. Any such expenditures 
that are not claimed in the year can be 
carried forward and deducted in any 
succeeding year.

A deduction is also allowed equal to 
the aggregate of:

• 8% of the original cost of depreciable 

assets used in the milling or 
concentrating of mineral ore or 
mineral products derived from the 
mineral ore, and

• 15% of the original cost of depreciable 

assets located in New Brunswick and 
used in the smelting or refining of 
mineral ore or mineral products.

This deduction is subject to a limit of 
65% of net profits if it has been claimed 
in two or more previous years. 

No other deduction is allowed for the 
capital cost of property, plant, and 
equipment, or for capital investment, 
depreciation, or depletion. However, 
certain leasing costs in respect of plant 
and equipment may be deductible up to 
a specified amount.

Taxation of Royalty and Rental 

Payments

Payments of royalties or rentals for 
ore extracted within New Brunswick 
are subject to a 16% tax. The operator 
paying the royalties or rentals is required 
to withhold and remit the tax payable in 
respect of the payment. 

Mining Tax Credits

Up to 18% of expenditures incurred 
after the commencement of production 
in New Brunswick in respect of a 3D 
seismic survey, deep drilling, or any 
other advanced exploration technology 
may be eligible for a credit against the 
total mining tax payable (subject to 
pre-approval of the expenditure). The tax 
credit is limited to $1 million in any given 
year. Any portion of the credit that has 
not been applied against the total mining 
tax payable in the year may be claimed 
in any succeeding year.
In addition, a tax credit against net 
profit tax is available, equal to 25% of 
eligible process research expenditures. 
This credit may be granted only after 
production commences. Any credit not 
fully utilized in a year may be used in 
the succeeding year.

Coal Royalty

New Brunswick’s Mining Act imposes 
a royalty of $0.16 per tonne of coal 
obtained or extracted under the 
authority of a mining lease. 
Operators of mines that are taxable 
under the Metallic Minerals Tax Act are 
not subject to the royalty provisions of 
the Mining Act.
The government may, at its discretion, 
suspend the requirement to pay 
royalties under the Mining Act for a 
period not exceeding 10 years.

Nova Scotia

Operators of mines in Nova Scotia are 
subject to the payment of royalties 
(mineral tax) under the province’s 
Mineral Resources Act. There is an 
additional tax applicable to gypsum 
mining (see below). The applicable rate 
is one of the following:

• the greater of:

– 2% of the operator’s net revenue

and
– 15% of the total net income for 

the year; 

or

• upon written notice from the Mine 

Assessor where the operator’s gross 
income for the year is less than 
a prescribed amount, 2% of the 
estimated net revenue for the year;

or

• a rate determined at the discretion 

of the government.

Royalties are payable in advance in 
quarterly instalments, with any balance 
payable on the due date for filing the 
annual tax return or within three months 
of the end of the operator’s fiscal year, 
whichever is earlier.

One component of the calculation of 
tax is the net revenue of the operator. 
Net revenue for a fiscal year is the 
gross income derived from output less 
deductible expenditures. Gross income 
is calculated using the market price 
of the mine output either at the time 
of sale or at the time of shipment, in 
situations where the output is sold, 
or otherwise at the time of transfer or 
consumption of the output. Deductible 
expenditures include costs of:

• marketing,
• shipping,
• smelting and refining, and
• packaging,

and other associated and related costs 
borne by the operator.

No deduction is allowed for (among 
other items):

• the cost of plant, machinery, 

equipment, or buildings;

• interest or other financing costs;
• depletion of property;
• the acquisition cost of a mineral 

© 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