Mineral tax for coal and other mines
Last updated on April 9, 2024
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Coal and other mines include all mines that aren’t quarries or placer gold mines. If you operate a coal or other mine you file your taxes annually using the mineral tax return and pay monthly instalments based on an estimate of your tax liability for the mine’s fiscal year.
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Tax rate
You pay mineral tax when your mine is more than covering current operating costs. The amount of tax you pay depends on if you’ve recovered the capital invested in your mine.
Your Cumulative Expenditure Account (CEA) tracks the capital you haven’t yet recovered. While you have a balance in your CEA and still have capital to recover, you pay a 2% Net Current Proceeds (NCP) Tax.
Once you no longer have a balance in your CEA, you pay a 13% Net Revenue Tax. To ensure you only pay one of the two taxes, you can claim a Cumulative Tax Credit to reduce your Net Revenue Tax.
Net current proceeds tax for coal and other mines
How to calculate
To calculate your net current proceeds, take your gross revenue and deduct your current operating costs. To ensure this amount is accurate, take the net earnings shown on the mine’s financial statements and:
- Add non-allowable expenses that were deducted on the mine's financial statements
- Deduct revenue that is exempt from Mineral Tax included on the mine's financial statements
- Deduct allowable expenditures that were not deducted as expenses on the mine's financial statements
- Add taxable revenue that was not included as revenue on the mine's financial statements
Gross revenue
Your gross revenue includes:
- The value of mineral product sold
- Cost recoveries from the operation of the mine
- Other current revenues from the operation of the mine
You cannot include gains and losses from commodity or currency hedging in your gross revenue.
Operating costs
In addition to specific rules about what can and cannot be included as an operating cost, there are three general criteria. Operating costs must be:
- Incurred by an operator of the mine
- Incurred for the purpose of earning revenue from the operation of the mine
- Reasonable in amount
Net revenue tax for coal and other mines
You pay 13% tax on your net revenue once you’ve recovered the capital invested in your mine and your Cumulative Expenditure Account (CEA) doesn’t have a balance. You pay this tax on the profit you earn in excess of the capital invested in your mine.
When you do have a balance in your CEA you pay Net Current Proceeds (NCP) Tax.
How to calculate
To calculate your net revenue, take your total revenue and deduct your CEA balance. If your CEA balance more than covers your revenue, the remainder is carried forward to the next year. You can reduce your tax payable by claiming a Cumulative Tax Credit.
Total revenue
When calculating your total revenue, include:
- Gross revenue
- Government grants, subsidies and other assistance you received for capital assets
- Insurance payments you received for capital assets
- Revenue from the recovery of capital asset costs
- Proceeds from the disposal of capital assets
- The fair market value of assets used less or discontinued
CEA balance
There are three general criteria for including expenditures in your CEA Balance. They must be:
- Incurred by an operator of the mine
- Incurred for the purpose of earning revenue from the operation of the mine
- Reasonable in amount
Specifically, your CEA balance can include:
- Opening balance in your Cumulative Expenditure Account (CEA)
- Pre-production discovery or development costs
- New mine allowance
- Current operating costs
- Increases or decreases in mineral product and supplies inventories
- Equipment lease or rental costs
- Capital asset purchasing costs
- Exploration costs
- Research costs
- Reclamation costs
- Investment allowance
Your CEA balance cannot include:
- Amounts paid for the right to minerals from a mine
- Services rendered or goods delivered after the end of the mine’s fiscal period
- Interest, dividends and costs of financing or arranging financing
- Costs of incorporation, organization or reorganization
- Costs and losses on hedging transactions
- For corporations, compensation in excess of $75,000 paid to a significant shareholder of the corporation or an affiliated corporation
- Costs incurred after the sale price of the mineral product is determined
- Any amount that is a reserve, contingency, allowance or bad debt expense
File and pay
Learn more about:
You must keep your business records at your office in B.C. for seven years after your mine’s fiscal year end.
Notify us when you change:
- Your permanent address
- The name of a mine
- The operator(s) of a mine
Contact information
1-800-667-1182
250-952-0191
250-952-0192