Taxes on mining— more changes, but in the right direction

CIM Bulletin, Vol. 72, No. 807, 1979

ROBERT D. BROWN, F.C.A., Price Waterhouse & Co.

The federal government kicked off the new budget season in November 1978, when Finance Minister Chretien announced a handful of proposed amendments to provisions of the federal Income Tax Act and Regulations affecting mining. (See Tax Notes in the January 1979 issue of the CIM Bulletin.)Declaring in his budget speech that these changes were in response to the report of the joint federal/provincial task force on resource taxation, Mr. Chretien tossed the ball to the provinces— "I want to take the lead here... I feel confident that the provinces will do their part".Quebec and Ontario, picking up the ball in their spring budgets, have announced favourable modifications to the provincial taxes on mining, with these moves being paralleled in the recent Manitoba budget, which proposes a flat-rate mining tax to replace the previous controversial two-tier royalty. In the meantime, the federal government passed a host of amendments to the federal earned depletion regulations. The result is yet another batch of complex tax changes for the industry to note and digest, but this time with the hopeful factor that most of the changes are favourable to the industry.This article reviews the current status of the federal budget changes, comments on the Ontario, Quebec and Manitoba proposals, and reports on the changes to the earned depletion regulations that were passed by Order-in-Council in March 1979.