Canada: CRA relief for “junior” mining exploration companies, other flow-through share issuers
Canada: Relief for junior mining exploration companies
The Canada Revenue Agency (CRA) in a technical interpretation (TI 2020-0874621E5) confirmed that “junior” mining exploration companies and other flow-through share issuers can file their tax returns based on recent draft legislation for a proposed 12-month extension to spend the capital they raise via flow-through shares.
The proposed changes for tax relief—and reporting and payment deadline changes—were included in draft legislation released in December 2020. Read TaxNewsFlash
The technical interpretation addressed whether taxpayers can file their returns based on the proposed amendments that have not yet been enacted. The CRA concluded that eligible taxpayers may file their tax returns, including Form T101C, in accordance with the draft legislation, even though it has not yet been enacted. Thus, junior mining exploration companies and other flow-through share issuers can file their tax returns based on the proposed 12-month extension.
Finance in December 2020 proposed temporarily giving eligible mining companies and other flow-through issuers 36 months (instead of 24 months) to incur eligible flow-through share expenses. This extension would apply to flow-through share agreements that an eligible company entered into after February 2018 and before 2021.
The measures would also provide flow-through share issuers an additional 12 months to incur eligible renounced expenses under the look-back rule, for agreements entered into in 2019 or 2020.
The proposed tax relief would apply with regard to eligible Canadian exploration expenses that are renounced before they are incurred under the look-back rule, by deeming expenses to be incurred up to 12 months earlier than the date when they are actually incurred for agreements entered into in 2019 or 2020. There would also be consequential changes to reporting and payment deadlines to reflect the temporary extensions and tax relief.
Read a January 2021 report prepared by the KPMG member firm in Canada
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.