CEEs are 100% deductible in the year in which they occur. Until 2018, CEEs also include some expenses involved in bringing a new mine into production, including clearing, removing overburden, stripping, and sinking a mine shaft. ACCAs for mining, as proposed in Budget 2013, will be phased out over 2017-2020 as follows: Transition Schedule of ACCA for Mining YearĬanadian exploration expenses (CEEs) are those incurred by the taxpayer for determining the existence, location, extent, or quality of a mineral resource, or petroleum or natural gas, in Canada. To be eligible for that accelerated depreciation, however, assets must have been acquired before the beginning of commercial production, or for major expansions, or (since 1996) for the portion of investment expenditures in excess of 5% of gross income from the mine.ĪCCAs for oil sands projects were phased out in 2014. In addition to the normal 25% rate of depreciation accorded to capital assets, the accelerated capital cost allowance (ACCA) can provide for a depreciation allowance of up to 100% of the asset cost. Government assistance, such as grants and investment tax credits, plus proceeds from the disposition of assets (not exceeding the acquisition cost), are deducted from the class. The capital cost of each particular depreciable asset used to gain or produce resource income is allocated to the appropriate class of assets for which a maximum annual depreciation rate is prescribed.
The depreciation of tangible assets is allowed under the system of capital cost allowances (CCA). Most capital assets acquired by mining and oil and gas companies qualify for a depreciation rate of 25% on a declining balance basis.
Mining taxes and royalties paid to a province or territory with respect to income from a mineral resource are fully deductible when computing income for federal income tax purposes. Provincial and Territorial Mining Taxes and Royalties Deduction
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