Canadian junior mining companies can breathe a sigh of relief as Budget 2016 extends a tax break for exploration firms that finance their exploration using so-called “flow-through” shares.
The authorities has extended the 15 per cent mineral exploration tax credit, that was slated to run out on March 31, until the end of March 2017.
“Given this is a challenging here we are at junior mining companies, the federal government proposes to support their mineral exploration efforts by extending the credit for an additional year,” the budget documents state.
Flow-through shares allow individual taxpayers to book their share of the company’s exploration expenses as credits against their personal incomes. Junior exploration companies tend to have little if any revenue, so they’re usually content to “renounce” their claim to exploration expenses.
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The mineral exploration tax credit is available to finance “grassroots” mineral exploration in Canada.
Extending the mineral exploration tax credit will cost the federal government about $20 million in lost revenue over the next two fiscal years. That’s since the credit utilizes a so-called “look-back” rule that allows funds raised in one calendar year with the advantage of the credit to become allocated to eligible exploration projects within the following twelve months.
Financial Post
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