Direct mining taxation is effectively lowered through initiatives like the Tax Holiday for New Mines, Off-site Exploration Allowance, New Investment Tax Credit and the Processing Allowance. Indirect taxation initiatives include sales tax exemptions on geophysical and exploration equipment and electricity used in mining, and a motive fuel tax exemption on diesel fuel for off-road mineral exploration.
Reductions in Mining Taxation
Other Tax Reductions
Effective for fiscal years ending after June 30, 2009, the mining tax rate will be reduced from 18% to the following graduated rates:
Operators with total profit between the tax thresholds will pay at the following notch rates:
A mining tax holiday is available for new mines established after January 1, 1993. Qualifying mine operators will not be required to pay the mining tax until their profits for mining tax purposes equal their capital outlays in opening the new mine. At the end of the tax holiday, operators will inherit the undepreciated balance of book assets.
Mining companies that increase their exploration activities in search of new mines in Manitoba are entitled to a deduction equal to 150% of exploration expenditures. Eligible exploration expenditures in a given year must exceed the average of expenditures in the previous three years.
A credit of 7% of investments, made between April 21, 1994 and December 31, 2003, in new mines and processing facilities in Manitoba, or major expansions of existing mines or processing facilities, is available. The credit is deductible to a maximum of 30% of mining tax payable in a given year and can be carried forward for use in future years.
The processing allowance, which may be deducted from mining taxes, has been increased from 10% to 20% of the original cost of processing assets acquired for new mines or major expansions to existing facilities.
For Corporation Capital Tax purposes unclaimed federal exploration and development expenses are deductible for all mining companies. The Corporation Capital Tax will be phased out by the end of 2010. The Corporate Income Tax will be reduced to 12% on July 1, 2009.
An exemption from motive fuel tax is allowed on diesel fuel for use exclusively off-road for mineral exploration and in off-highway mining activities for the transportation of ore from a Manitoba mine to a Manitoba processing centre, and for mining ore recovery equipment.
Exemption for employers from payroll tax under the levy for health and post-secondary education is increased from $750,000 to $1 million of annual payrolls. Employers with annual payrolls between $1 million and $2 million will pay tax on an adjusted basis.
Electricity used directly for mining and manufacturing activities is exempt from provincial sales tax.
Geophysical survey and exploration equipment (other than a drill rig) designed and used solely for the prospecting or exploration for minerals which is purchased in or brought into Manitoba on a temporary basis, is exempt from sales tax.
Prototype equipment used to research and develop new mining technologies that is purchased in or brought into Manitoba on a temporary basis is exempt from sales tax.