Mining Tax Regime
The Mining Tax Act sets out the basis of Québec’s mining tax system, the purpose of which is to:
- stimulate mineral prospecting, research, exploration and mining activities while fostering sustainable development;
- encourage development in Northern Québec;
- promote processing in Québec.
The regime was developed in order to ensure that Quebecers obtain a fair share of the benefits derived from the extraction of non-renewable resources in the public domain, without compromising the operators’ competitiveness.
The following publication sets out the main elements of the regime: The Mining Tax Regime In Brief .
Calculating mining tax
An operator that carries out mining operations, other than for surface mineral substances, is subject to the Mining Tax Act and must produce a mining tax return. The operator is required to pay mining duties corresponding to the higher of the following two amounts:
- A minimum mining tax based on the mine-mouth output value, at the following rates:
- 1 % on the first $80 million
- 4 % on the remainder
- Mining tax on its annual profit, at a progressive rate ranging from 16% to 28%, depending on its profit margin.
The method used to calculate an operator’s annual profit is based on a “mine by mine” basis. The operator must first calculate the annual earnings from each of its mines, and then determine its annual profit.
When calculating the operator’s annual profit, a loss incurred by one mine cannot be used to reduce annual earnings from another. In addition, any annual loss incurred by an operator cannot be carried over.
The mining tax regime provides for certain allowances in order to support companies at different phases of the mining cycle:
- The exploration allowance
- The pre-production development allowance
- The community consultations allowance
- The environmental studies allowance
- The sustainable development certification allowance (new allowance – hyperlink will be supplied later on)
- The depreciation allowance
- The post-production development allowance
- The processing allowance
- The additional allowance for a mine situated in Northern Québec
Finally, an operator may claim credits on duties payable related to mining tax.
An operator who must pay duties based on its annual profit can deduct an amount as a non-refundable duties credit related to the minimum mining tax .
An operator who must pay duties based on the amount of the minimum mining tax can deduct an amount as a refundable duties credit for losses .
The latter credit allows all operators to obtain a refundable credit equivalent to 16% of the following expenses:
- the pre-production development expenses incurred in the fiscal year;
- 50 % of the community consultations expenses incurred in the fiscal year that give entitlement to the community consultation allowance;
- 50% of the environmental study costs incurred in the fiscal year that give entitlement to the environmental studies allowance;
- the sustainable development certification expenses incurred in the fiscal year that give entitlement to the sustainable development certification allowance.
In addition, the refundable duties credit for losses allows eligible operators that carry out exploration work to obtain a refundable credit equal to 8% of their eligible exploration costs.
Under the Mining Tax Act, an operator is “a person or partnership, other than a joint venture, that performs mining operation work, either alone or with others, or through a mandatary, on land situated in Québec, or in a mine the person or partnership owns, leases or occupies.”
Under the Mining Tax Act, a mining operation is “all work related to the various phases of mineral development, namely exploration, pre-production development, post-production development, the reclamation or rehabilitation of land situated in Québec, the extraction, processing, transportation, handling, storage and marketing of a mineral substance extracted from Québec soil, until its alienation or its use by the operator, and the processing of mine tailings from Québec, but does not include work:
(1) performed for others;
(2) carried out after 17 October 1990 in respect of surface mineral substances within the meaning assigned to that expression in section 1 of the Mining Act, or of mineral substances the rights in or over which have been surrendered to the owner of the soil under section 5 of that Act.”
(1) during the fiscal year, is not developing any mineral substance in reasonable commercial quantities; and
(2) during the fiscal year, is not associated with an entity that develops a mineral substance in reasonable commercial quantities in the fiscal year.”
For additional information, please see the Mining Tax page of Revenu Québec’s website .