Exploration companies get consultation tax break (CBC News North – March 14, 2015)


Companies can now write-off cost to consult aboriginal groups

The federal government has created a new tax break for Canadian exploration companies that will allow them to deduct expenses related to consultation with aboriginal groups.

Exploration companies can spend tens of thousands of dollars explaining their projects to aboriginal communities that live near proposed mine sites. Costs associated with environmental and First Nations consultation will now qualify as a Canadian Exploration Expense.

Costs include flights to communities, hotels, hall rentals, vehicle rentals, publication of materials, translation of information into local languages — and of course, the small courtesy of bringing coffee and snacks.

Resource Analyst John Kaiser says offering tax deductions could help junior companies survive the early financial hurdles of early-stage exploration. “When it starts to show up early in the exploration cycle, before you even know if there’s anything worth developing, the costs become onerous,” he said.

Jamie Kneen of MiningWatch Canada says the change could attract more investors but it doesn’t address capacity issues that aboriginal groups face. “The mounds of applications and papers they get to go through — from water permits to land use plans — they don’t have time time and capacity to deal with it all. This doesn’t address that at all,” he said.

Northern exploration costs six times more

The N.W.T. and Nunavut Chamber of Mines says allowing companies to write off the costs of consultations will provide only minor relief for the territories struggling mining industry.

“Exploration costs up here are upwards of six times or more expensive than the South,” said Tom Hoefer, the chamber of mines’ executive director.

Hoefer says improving infrastructure and offering tax credits specific to the North is also needed.

Federal Finance Minister Joe Oliver announced the change in policy on March 1 at a meeting of the Prospectors and Developers Association of Canada.

For the original source of this article, click here: http://www.cbc.ca/news/canada/north/exploration-companies-get-consultation-tax-break-1.2995345