Canada extends exploration tax credit

The federal government is extending its 15% mineral exploration tax credit for investors in flow-through shares for another year.

The extension, expected to provide $65 million in support for exploration, was due to expire on Sunday. In 2021, it helped 300 companies to raise equity by issuing eligible flow-through shares to more than 12,400 investors, the government said on Thursday.

The Association for Mineral Exploration was quick to welcome the move, which was delivered in part by Canada’s Natural Resources Minister, after the industry group had lobbied for the extension in recent months.

“We would like to thank Minister Jonathan Wilkinson for his tireless advocacy on this matter to push for the extension,” AME president and CEO Keerit Jutla said in a social media post.

Uniquely Canadian

The concept of flow-through shares, which give tax incentives to buyers and allow charitable donations, is uniquely Canadian – no other country has them. Proponents contend they are vital to attract investors troubled by the wide divergence between low company valuations and the relatively high prices of some metals. They may be more important now as Canada strives to develop critical mineral resources for the batteries to fight climate change.

“Canada is a mining nation,” Wilkinson said in a release on Thursday. “The responsible and sustainable management of our mineral resources has provided good jobs and wealth creation for generations of Canadians.”

Other tax credit

Ottawa also offers the separate 30% critical minerals exploration tax credit applying to a list of 31 minerals deemed important for the energy transition such as battery metals. It was introduced two years ago and can’t be used on top of the 15% exploration tax credit.

The extension reflects an effort to balance economic development with environmental stewardship and to enhance the competitiveness of Canada’s mining and exploration sector on a global scale, according to the government announcement.

“Canada has an abundance of the minerals needed to build our net-zero economy,” Finance Minister Chrystia Freeland said in the release. “Supporting exploration efforts to find mineral deposits is a key part of creating the next generation of good-paying mining jobs across the country.”