Budget Flash
Jocelyne Lamothe
Direction du développement minéral
Adjustment of the tax credit relating to resources
In the June 12, 2003 Budget Speech, the gouvernement du Québec announced that all of the tax credits and tax holidays
for businesses will be tightened. The refundable tax credit for
resources announced in the March 2001 Budget Speech as well
as the temporary improvement added in August 2002 are aimed
at by these tightening measures.
In this way, the total credit of 60%
that was available to eligible mining corporations has been reduced
by 25% and is distributed in the following proportions:
| |
Corporations not operating any mineral resource |
Other corporations |
| |
Refundable portion |
Non-refundable portion |
Total |
Refundable portion |
Non-refundable portion |
Total |
| Expenses relating
to mineral resources
Near or Far North
Elsewhere in Québec
|
33.75
30 |
11.25
15 |
45
45 |
18.75
15 |
26.25
30 |
45
45 |
| Expenses relating
to other natural resources (cut stone) |
15 |
n.a. |
15 |
15 |
n.a. |
15 |
In addition, this credit will henceforth be taxable
under both the Taxation Act and the Mining Duties Act.
This rate reduction as well as the taxation of
the tax credit relating to resources will be applied to eligible
expenses incurred after June 12, 2003.
Modification of the tax benefits relating
to flow-through shares
Even though Québec’s flow-through
share system is maintained until the end of year 2004,
it also undergoes reductions that are comparable to those applied
to the refundable tax credit for resources.
In fact, the additional deductions of 25%
and 50% that were admitted previously to the individual
investor decrease to 10,42% and 20,83%
respectively. The individual may claim, for example, a total deduction
equal to 131,25%, instead of 175%, regarding surface
exploration expenses incurred in Québec that have been foregone
in his favour.
Moreover, deductions for flow-through
share issue expenses may no longer be foregone in favour of an investor
and the additional capital gains exemption for flow-through
shares is abolished. These modifications apply to flow-through
shares issued after the day of the Budget Speech. However, they
do not apply to flow-through shares issued either following
a private placement or following an application for receipt of the
final prospectus or prospectus filing exemption, as the case may
be, made no later than the day of the Budget Speech.
Over the coming months, the Québec ministère
des Finances will review the efficiency and utility of these two
measures and will decide whether or not to maintain them.
|
