Reduce Your Taxes for Coal & Other Mines
You may be able to reduce your taxes if you have eligible exploration expenses or you’re eligible for any of the following tax allowances, credits or exemptions:
- Investment Allowance
- New Mine Allowance
- Cumulative Tax Credit
- Reclamation Tax Credit
- Nisga'a Exemption
You can’t use allowances or credits from one mine to reduce the tax owing on other mines.
Because you can’t claim interest on the capital invested in your mine, you can claim an investment allowance while your mine is in commercial production.
The investment allowance is calculated using the average balance of your Cumulative Expenditure Account (CEA) for the fiscal year. To determine your allowance, multiply the average balance of your CEA by your investment allowance rate. You claim this allowance when you file your Mineral Tax Return.
The new mine allowance encourages the development of new mines and eligible expansion projects. You can claim this allowance if:
- Your new mine begins producing minerals between January 1, 1995 and December 31, 2020
- You expand the capacity of the mill that processes the ore from your mine by at least 25% in the fiscal year after the expansion compared to the fiscal year before the expansion
- The expansion project is completed between January 1, 1995 and December 31, 2020
The new mine allowance is calculated as 1/3 of your eligible capital expenditures from the development of the new mine or expansion project. Once your new mine has begun commercial operations for the first time or your expansion is complete, add this amount to your Cumulative Expenditure Account (CEA) when you file your Mineral Tax Return.
Note: For expansion projects, the new mine allowance can be claimed the year after the expansion is complete, if all criteria are met.
All of the Net Current Proceeds Tax you pay is tracked in your Cumulative Tax Credit Account (CTCA). In future years when you pay Net Revenue Tax, you can claim the cumulative tax credit on your Mineral Tax Return. The balance in your CTCA will then be deducted from the Net Revenue Tax you owe for the year.
The reclamation tax credit is a refund of previously paid Net Revenue Tax. You’re eligible for this credit if your mine has reclamation costs but no current income to claim them against. For example, if you have reclamation costs but your mine has closed.
To claim this credit, you must add your reclamation costs to your Reclamation Cost Account by completing a Reclamation Cost Election Schedule (PDF). The deadline to add reclamation costs to this account is six months after your mine's fiscal year end. You claim the reclamation tax credit when you file your Mineral Tax Return.
Under the Nisga’a Nation Taxation Agreement a mine operating on or under Nisga’a Lands is exempt from provincial Mineral Tax.