CANADA Law and Practice Contributed by: Darrell Podowski, Jennifer Poirier, Joel Matson and Simi Fagbongbe, Cassels Brock & Blackwell LLP
mineral value chains, which entered its public con - sultation phase in 2024; and • the Towards Sustainable Mining standard, dis - cussed in 2.7 ESG Guidelines and Regulations . 3.4 Energy-Transition Minerals The federal government released “The Canadian Criti - cal Minerals Strategy” on 9 December 2022, contain - ing a list of 31 critical minerals that are deemed to be: • essential to Canada’s economic security and its supply if threatened; • required for Canada’s transition to a low-carbon economy; or • a sustainable source of highly strategic critical minerals for Canada’s partners and allies. In June 2024, this list was updated to add three more minerals: high-purity iron, phosphorous and silicon metal, for a total of 34 critical minerals. The Canadian Critical Minerals Strategy addresses the following five core objectives: • supporting economic growth, competitiveness and job creation; • promoting climate action and environmental pro - tection; • advancing reconciliation with Indigenous peoples; • fostering diverse and inclusive workforces and communities; and • enhancing global security and partnerships with allies. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes Corporations that carry on exploration and mining activities in Canada are subject to the general income tax rules that apply to all corporations operating in the country. Income tax is imposed at the federal level under the Income Tax Act (Canada), and at the pro - vincial and territorial level each province and territory has its own income tax statute. The current Canadian federal corporate tax rate is 15%, and provincial/ter - ritorial tax rates range from 8% to 16%.
A non-resident corporation carrying on business in Canada is subject to Canadian income tax at the same tax rate as is applicable to Canadian resident corporations, in addition to a 25% “branch tax” on profits that are not reinvested in Canada. The branch tax is intended to approximate withholding tax on dividends; where the dividend withholding tax rate is reduced under an applicable tax treaty, the branch tax is generally correspondingly reduced. In addition, a non-resident is subject to income tax in Canada on the disposition of “taxable Canadian property”, which includes any interest in real or resource properties situated in Canada, and certain shares and partner - ship or trust interests that derive their value from such properties. Canada levies a 25% withholding tax on certain pay - ments to non-residents, including dividends, certain interest payments, rents and royalties. The rate of Canadian withholding tax may be reduced if the non- resident recipient is eligible to claim the benefits of one of Canada’s tax treaties. Each province and territory also levies separate mining taxes or royalties on mining activities; the rates and basis of calculation vary depending upon the jurisdic - tion and the type of mineral. In many provinces and territories, the mining tax is computed by reference to mining profits, whereas certain provinces impose royalties that vary according to the specific mineral. 4.2 Tax Incentives for Mining Investors and Projects As in other sectors, a corporation engaged in explo - ration and mining activities is entitled to deduct expenses incurred for the purpose of earning income. A corporation may also deduct certain capital expen - ditures, including tax depreciation on tangible capital assets (capital cost allowance, or CCA). Canadian tax regimes applicable to exploration and mining recognise the capital-intensive nature of the mining industry. To ensure the international competitiveness of Canada’s resource industry, these regimes provide incentives designed to encourage investment, includ - ing the following. • Mining taxes and royalties paid to a province or territory for income from a mineral resource are ful -
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