Canada has decided to extend the Mineral Exploration Tax Credit, which was ending on March 31, for a full extra year, the country's natural resources minister announced Sunday evening.
Speaking to media attending the 85th version of the Prospectors & Developers Association of Canada's (PDAC) International Convention in Toronto, minister Jim Carr said the 15% mineral exploration tax credit is intended to incentivize junior mineral exploration companies and their investors to spend on early-stage mineral projects.
He noted that in 2015 over 200 companies made use of the credit by granting "flow-through shares" and more than 410,000 investors benefitted from the credit.
The flow-through shares system allows junior miners to issue shares to investors to fund exploration projects. This way, backers can deduct the exploration company's expenses against their taxable income. The mineral exploration tax credit adds a 15% incentive on top of that.
Carr said the decision to extend then METC aims to support a key local industry, which is globally recognized for its innovation and sustainability.
A Canadian company renouncing, or "flowing through", an exploration expense to an investor, must get out in the field and spend those exploration dollars within 24 months. In certain circumstances, explorers may be forced to get to work in a shorter timeframe.