• costs to operate or maintain 

community facilities; and 

• the cost of environmental cleanup 

for land not included in the mine 
property. 

To qualify for the CEDEA, an expense 
must be approved by Natural 
Resources Canada.

Gold Royalty

Under the Placer Gold Act, a 2.5% 
royalty applies to all gold dust as mined 
and gold bars shipped from Yukon. The 
gold is valued at a fixed price of $15 per 
ounce for the purposes of computing 
the gold royalty. 

Coal Royalty

The Coal Regulation levies a royalty 
on each holder of a lease equal to 
$0.10 per tonne of merchantable coal 
mined on lands acquired by lease and a 
royalty on each holder of a coal mining 
permit equal to $0.25 per short ton of 
merchantable output of the mine. 

Northwest Territories 

and Nunavut

In the Northwest Territories and 
Nunavut, the government of Canada 
is responsible for the management of 
natural resources and the administration 
of Crown land. The Northwest Territories 
and Nunavut Mining Regulations 
(Canada) impose a mining royalty on an 
operator or owner of a mine located in 
the Northwest Territories or Nunavut 
(“the Crown royalty”). 

The Crown royalty is levied on a mine-
by-mine basis and is equal to the lesser 
of 13% of the value of the output of the 
mine and the amount determined using 
the escalating rates shown in Table 12.

The value of the output of a mine for 
a fiscal year is the amount by which 
the fair market value of minerals 
produced and certain other amounts 
exceed the permitted deductions and 
allowances. The other amounts to be 
included in the value of the output of a 
mine include:
• payments received for the 

reimbursement of costs previously 
deducted, 

• proceeds of disposition received 

from the disposition of mining assets 
in excess of the undeducted balance 
of depreciable assets, 

• proceeds received from insurance of 

minerals produced from the mine,

• amounts withdrawn from a mining 

reclamation trust, and

• any grants received from the federal 

government.

Hedging gains are specifically excluded 
in computing the value of the output of a 
mine for the year. 

An operator may claim a deduction in 
computing the value of the output of a 
mine for a fiscal year for the following:

• operating costs of mining and 

processing minerals from the mine, 
including general and indirect costs 
incurred at the mine; 

• the cost of marketing, selling, 

storing, and transporting minerals 
produced from the mine; 

• the cost of reclamation at the mine; 
• certain exploration costs incurred on 

Crown land other than the mine site;

• a depreciation allowance equal to 

100% of the cost of the depreciable 
assets of the mine, not exceeding 
the undeducted balance of 
depreciable assets;

• a development allowance equal 

to 100% of the exploration and 
development costs incurred at the 
mine, not exceeding the undeducted 
balance at the end of the fiscal year;

• an allowance for contributions to a 

mining reclamation trust; and

• an annual processing allowance equal 

to the lesser of 8% of the cost of 
processing assets and 65% of the 
value of the output of the mine after 
deduction for the preceding amounts.

The mining regulations specifically 
prohibit the deduction of:

• financing costs, 
• royalties, 
• hedging losses, 
• costs for an office not located at the 

mine, and 

• the cost of goods or services not 

directly related to the mine.

Table 12: Mining Royalty Rates, 
Northwest Territories and Nunavut, 
as at June 30, 2013

Annual Profits

Royalty 

Rate

*

$0 to $10,000

0%

Over $10,000 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 to $40 million

12%

Over $40 million to $45 million

13%

Over $45 million

14%

*  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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