Mining Royalty

Under Yukon’s Quartz Mining Act, 
a mining royalty applies to all ore, 
minerals, or mineral-bearing substances 
mined in Yukon in a calendar year. The 
mining royalty is computed in reference 
to the value of the output from the mine 
on an escalating basis using the rates 
shown in Table 11.

The mining royalty is computed on 
a mine-by-mine basis. 

Value of the Output

The value of the output of a mine for 
a calendar year is the amount by which 
the value of the minerals produced 
exceeds the sum of:

• the deductions for the mine,
• the development allowance for 

the mine,

• the depreciation allowance for the 

mine, and 

• the community and economic 

development expense allowance 
for the mine.

The value of the minerals produced 
is the sum of:

• the proceeds from the sale of 

minerals, 

• the change in the market value of 

the mineral inventory during the 
calendar year, 

• proceeds from the sale of mining 

assets in excess of the UCC, 

• the amount of cost 

reimbursements received in 
the calendar year, and 

• the amount of insurance proceeds 

receivable in the calendar year. 

Gains from commodity or currency 
hedging are excluded from the 
calculation of the value of minerals 
produced. 

Deductions

A deduction may be claimed in 
computing the value of the output 
of a mine for a calendar year for 
the operating costs of mining 
and processing minerals from the 
mine, including: 

• maintenance,
• exploration and development costs 

incurred at the mine, 

• storage and transportation costs, and 
• reclamation costs.

The Quartz Mining Act specifically 
prohibits the deduction of:

• financing costs, 
• royalties, 
• hedging losses, 
• costs for an off-site office, and
• the cost of goods or services not 

directly related to the mine. 

Development Allowance

The development allowance provides 
a deduction, calculated on a units-
of-production basis over the life of 
the mine, for certain exploration and 
development expenditures incurred prior 
to the commencement of production 
(the “pre-production expenditures”). 
The development allowance for a 
calendar year is equal to the proportion 
of the undeducted pre-production 
expenditures for the mine that the 
amount of ore produced by the mine for 
the year is of the mineral reserves of the 
mine at the beginning of the year. 

Depreciation Allowance

An operator may deduct a depreciation 
allowance equal to 15% of the original 
capital cost of mining assets on an 
annual basis until the original capital cost 
is fully claimed. Mining assets are assets 
used in the operation of a mine that have 
a capital cost in excess of $10,000 and 
an expected useful life of over one year.

Community and Economic 
Development Expense Allowance

An operator must deduct a community 
and economic development expense 
allowance (CEDEA) equal to the least of: 

• the undeducted balance of qualifying 

expenditures for the mine for the year; 

• 15% of all amounts claimed as 

deductions, development allowance, 
and depreciation allowance;

and 

• 20% of the value of the output of the 

mine for the year after all deductions. 

Qualifying expenses for the purposes of 
the CEDEA include:

• capital costs for constructing or 

repairing community infrastructure 
and facilities; 

Table 11: Mining Royalty Rates, Yukon, 
as at June 30, 2013

Annual Profits

Royalty 

Rate

*

$0 to $10,000

0%

Over $10,000 to $1 million

3%

Over $1 million to $5 million

5%

Over $5 million to $10 million

6%

Over $10 million to $15 million

7%

Over $15 million to $20 million

8%

Over $20 million to $25 million

9%

Over $25 million to $30 million

10%

Over $30 million to $35 million

11%

Over $35 million

12%

*  The rate is applied to profits within each 

specified increment, not to the total profits.

© 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