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this page INCOME TAX INTERPRETATION WILL HELP MINERAL EXPLORATION COMPANIES WORKING IN CANADA Toronto, September 20, 2007 – The federal government announced yesterday an interpretation of Canada’s income tax legislation that will have a significant and positive impact on companies exploring for minerals in Canada. In a letter sent to the Prospectors and Developers Association of Canada (PDAC), the Canada Revenue Agency provided guidelines that it will use to determine whether costs incurred by exploration companies for community consultations, baseline environmental studies, and feasibility studies will qualify as Canadian exploration expenses (CEE). PDAC President Patricia Dillon stated that this announcement marked the successful outcome of four years of lobbying by the association for this interpretation. “Consulting with local communities and conducting baseline environmental studies are integral to exploration programs today. The mineral exploration industry accepts them as costs of doing business. However, because these costs have not been treated as CEE, they could not be covered by funds raised through flow-through shares. This made it difficult for junior exploration companies, most of which rely on share issuance for working capital.” Under the new CRA guidelines, activities such as environmental assessment or consultation processes undertaken to meet a legal or informal obligation under the terms of an exploration permit will, in general, be treated as CEE. A copy of the guidelines, which were prepared in consultation with Natural Resources Canada and Finance Canada, is available at www.pdac.ca. The Prospectors and Developers Association of Canada is an advocacy association for prospectors and companies active in the search for and development of mineral deposits. The association annually hosts the largest international convention of its kind in the world in Toronto. The 2008 event will be held from March 2 to 5 in the south building of the Metro Toronto Convention Centre. More information Bernard Ross, Canada Revenue Agency, telephone +1 418 649 3043 Prospectors and Developers Association of Canada |
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