Regulatory Submissions

In August 2024, Finance Canada published for consultation various legislative proposals to address Budget 2024 measures, including two proposals to amend the legislation related to tax incentives that support the mineral sector.

One proposal aims to offset an increase in Alternative Minimum Tax (AMT) and the capital gains inclusion rate by amending parts of the AMT. Specifically, the key proposed change eliminates (For AMT calculation) the requirement to add back deductions obtained by purchasing flow-through shares (FTS).

The second proposal amends the legislation related to the Clean Technology Manufacturing Investment Tax Credit (CTM-ITC) – a new incentive that provides a refundable 30% tax credit for capital investments in various eligible activities to extract and process six qualified materials that are essential for clean technologies (Copper, nickel, lithium, cobalt, graphite and rare earth elements). Under the original legislation, qualified materials should account for at least 90% of production to be eligible for the credit. PDAC and other industry stakeholders recommended that due to the polymetallic nature of deposits in Canada, such a high threshold would preclude the vast majority of projects from receiving the credit, and Finance responded by reducing the threshold to only 50% of production.

As part of its strategy to pursue the low carbon economy and achieve national net-zero goals for Canada, in Budget 2023 the Federal Government announced various tax incentives related to a range of emission reduction technologies.

One incentive that is relevant to the mineral sector is the Clean Technology Manufacturing Investment Tax Credit (CTM-ITC), which will provide a refundable 30% tax credit for capital investment in various eligible activities to extract and process six critical minerals that are essential for these clean technologies – copper, nickel, lithium, cobalt, graphite and rare earth elements.

On December 20, 2023, Finance Canada published the draft legislation for the CTM-ITC, on which PDAC responded with a commentary letter to convey some concerns regarding the proposed legislation and to improve the effectiveness of this incentive.