LEGAL COPYRIGHT NOTICE

© 2011 InfoMine USA, Inc.

Please note:
InfoMine USA’s subscription fees are charged
on a per user basis. Unauthorized redistribution
of InfoMine USA information, including the
forwarding of email publications to third parties
and the copying of printed publications, is
prohibited without prior written authorization
of InfoMine USA, Inc.
If you wish to add users to your subscription please contact us.
After your company has purchased its first subscription to Coal
Cost Guide, second and third users at the same location receive
their subscriptions at a 50% discount. Four or more subscribers
receive a 75% discount, and 10 or more added subscribers are
eligible for special bulk rates. For information on discounts for
other company locations, please contact us.
Tel: 509-328-8023
Fax: 509-328-2028
Email: jleinart@infomine.com

InfoMine USA, Inc.

1120 North Mullan Rd., Suite 100
Spokane Valley, WA 99206 USA
Tel: +1-509-328-8023 FAX: +1-509-328-2028
 2011 Coal Cost Guide
Section TA
Canada Taxes
CONTENTS Compiled by Jerry Olson

CANADA Page CANADA Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Canada Federal
Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Large Corporations Tax . . . . . . . . . . . . . . . . . 3
Goods and Services Tax . . . . . . . . . . . . . . . . 3
Provincial Taxes
Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
British Columbia . . . . . . . . . . . . . . . . . . . . . . 5
Manitoba . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New Brunswick . . . . . . . . . . . . . . . . . . . . . . . 8
Provincial Taxes
Newfoundland/Labrador . . . . . . . . . . . . . . . . . . . 9
Northwest Territories . . . . . . . . . . . . . . . . . . . . 10
Nova Scotia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Nunavut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Prince Edward Island . . . . . . . . . . . . . . . . . . . . 15
Québec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Saskatchewan . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Yukon Territory . . . . . . . . . . . . . . . . . . . . . . . . 18

INTRODUCTION

Canadian mining companies are subject to taxation at the federal, provincial and local level. The taxes of primary
importance for mining are as follows:

Federal Taxes Provincial Taxes Provincial Taxes Local Taxes

• Federal Income Tax • Provincial Income Taxes • Provincial Mining Taxes • Property Taxes
• Goods and Services Tax (GST) • Provincial Capital Taxes • Provincial Sales Taxes • Business Taxes

Each of these taxes is described in the individual federal and province sections that follow. These descriptions are
intended for general information and for pre-feasibility level engineering estimates only. Although the taxation rules
discussed here apply to mining in general, some industrial and aggregate producers are under different regulations.
An accountant or other tax professional should be consulted in all cases prior to making a decision where taxes may
be a factor. All currency amounts are reported in Canadian dollars.

CANADA FEDERAL

Changes: New corporate tax rate.
Income Tax
Prior to 2008 the net corporate income tax rate for
mining companies was the general 21% rate that
applies to other corporations. Effective January 1,
2008 the tax rate was set at 19.5% and the 4%
corporate surtax was eliminated.
Income earned outside Canada is taxed at the full
33%. The general tax rate is to be simultaneously
reduced such that it will be 16.5% in 2011 and 15% in
2012.
For small businesses that qualify as Canadian
Controlled Private Corporations (CCPCs), effective
after tax year 2008, the first $500,000 of income is
taxed at 11%, with no surtax. Income greater than
$500,000 is taxed at the standard rate.
In general, the tax regulations shown here apply
equally to domestic or foreign firms operating in
Canada. Alternatively, a foreign firm can establish a
Canadian corporation to conduct business in Canada.
In general terms, federal taxable income for a mining
company is defined as mining revenue less the
following deductions:
• operating costs
• capital cost allowance (CCA)
• resource allowance
• Canadian exploration expense (CEE)
• cumulative Canadian development expense
(CCDE)
• interest expense
• Crown royalties and provincial mining taxes
paid.

TA-Canada
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE 1
Crown royalties and provincial mining taxes became
fully deductible for mining firms in 2007 to
compensate for elimination of the Resource
Allowance.
Operating Costs
Operating costs include the costs of mining,
processing (to include smelting and refining),
transportation, non-government royalties, general and
administrative, selling, and ongoing overburden
removal.
Capital Cost Allowance (CCA)
The CCA is based on a system of classes, i.e. pools of
assets established for various types of depreciable
property. Each class has an assigned depreciation rate
appropriate for the class. Any portion of the allowable
deduction may be taken in a given year. Most
depreciable assets used in mining are considered Class
41 assets. Typical assets in this category include mine
and mill equipment and related buildings,
transportation and storage facilities and assets
providing services to mine related communities. Class
41 assets have a maximum annual deduction of 25%
of the applicable pool total. The pool is increased each
year by 50% of the capital cost of assets acquired in
that year and decreased by the depreciation deduction
and any investment tax credit utilized for the year.
The proviso that only 50% of the cost of the assets
may be added in the year incurred is in recognition of
the fact that assets are acquired throughout the year.
Therefore, on average they will have been acquired
midyear, and are eligible for one half year of
depreciation. The remaining 50% of the value of
newly acquired assets is added to the pool in the
following year.
The CCA rate for computer equipment (including
systems software) acquired after January 27, 2009, and
before February 2011 is increased from 55% to 100%
with no half-year rule. As a result, a full write-off can
be claimed in the first tax year that CCA deductions
are available.
Buildings, machinery and equipment acquired for
use at a new mine or for a major mine expansion may
qualify for an accelerated CCA rate of up to 100%,
with limits, deductible in the year the mine begins
production or the expansion is in place. Recently, the
investment necessary for a “major expansion” has
been defined as a capital expenditure of 5% or more of
mine gross revenue. Industrial mineral mines are not
eligible for the accelerated depreciation.
Accelerated CCA deductions cannot exceed income
prior to deductions for exploration and development
expenses and any accelerated deduction greater than
the normal 25% amount.
A new mine is considered to be in production when
TA-Canada
2 COAL COST GUIDE
it achieves 60% of its planned capacity for a period of
90 days. Items that are not contained in the class 41
pool are most generally class 10. Under this class a
depreciation rate of up to 30% is allowed. Accelerated
depreciation is not allowed for class 10 items.
With continued development of regulations to
determine proper asset classification, it has become
more difficult to determine what is and what is not
eligible for accelerated depreciation. A careful review
of the regulations is recommended before making a
major investment.
Resource Allowance
The allowance was completely phased out by 2007.
Canadian Exploration Expense (CEE)
These are the expenses incurred for exploration in
Canada, and expenses incurred prior to the start of
production to bring a new mine in Canada into
production, including clearing, overburden removal,
shaft sinking, etc. The full amount of the CEE may be
deducted in the year incurred to the extent of income
from any source for the corporation. Any balance not
currently deductible may be carried forward
indefinitely in a pool called the Cumulative Canadian
Exploration Expense (CCEE) pool. Alternatively,
exploration expenses may be transferred through
“flow-through-shares”. See the discussion below.
Flow-Through-Shares
Flow-Through-Shares are a means for obtaining
financing for mining exploration and development in
Canada by sale of the right to claim specific
expenditures as a tax deduction. In this manner an
investor may utilize the tax deduction normally
allowed a mining company for exploration costs. The
funds must be used for exploration within one year of
assignment to the mining companies. Although
foreign firms may also invest in these shares they can
only be used to defray Canadian income taxes. The
investor is subject to the same tax rules as the mining
company in the determination of the allowable
deduction.
Cumulative Canadian Development Expense
(CCDE)
These are development expenses made on Canadian
properties after commencement of production. They
include acquisition costs, underground access and
haulage development. Up to 30% of the unclaimed
balance in the CCDE pool may be deducted each year.
The unclaimed balance may be carried forward
indefinitely and if an operating loss results it may be
carried forward or back as defined by regulations for
income.
Copyright © 2011 InfoMine USA, Inc.
 Money received from sale of “flow-through-shares”
is considered a capital gain. Therefore, one half of the
proceeds is taxable as income. In special
circumstances it is possible to deduct the expenses
before they are incurred; however, the mining
company must pay additional taxes to compensate the
government for lost revenue.
Reclamation Expenditures
Reclamation expenditures are deductible in the year
they are incurred. Any monies set aside for future
reclamation work are not deductible unless placed in
a reclamation trust. As the funds are utilized from the
trust, as reclamation commences, they must be
reported as income by the firm.
Capital Gains
The amount of taxable gain generated by sales of
assets is 50% of the difference between the acquisition
cost less depreciation, and the sale price. Small
business capital gains can be fully tax sheltered by
reinvestment in a second, qualified small business
venture.
Loss Carryovers
Capital losses may be carried back three years and
forward indefinitely. Operating losses may be carried
back three years and forward seven.
Investment Tax Credit
In concert with other changes in the Federal tax laws
that apply to mining companies, a 10% investment tax
credit has been re-instituted. This is applied to all
Canadian exploration costs.
Foreign Investment by Canadian Firms
Canadian firms with mines in other countries may
deduct expenses for acquisition, exploration, and
development related to these foreign operations. This
allows companies to take advantage of deductions for
initial development expenses.
ALBERTA
Changes: None.
Corporate Income Tax
Alberta is in the process of reducing corporate income
tax rates. Provincial taxable income derived from
operations in the province of Alberta is taxed at the
rate of 3.0% or 10.0%. As of April 1, 2007 the first
$430,000 of taxable income for small privately owned
corporations with majority Canadian ownership was
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
Generally firms establish a branch in the subject
country and income and losses are combined with that
of the domestic operations for Canadian tax purpose.
A Canadian firm can deduct up to 30% of its
cumulative resource expenses in each country
providing it does not exceed the income from mining
operations in that country. Regardless of profitability,
10% of these expenses are deductible annually.
Losses can be carried forward seven and back three
years. Firms with developed mines in other countries
prefer to establish a subsidiary in the host country.
Using this ownership vehicle, income is not taxable
until remitted to the domestic, Canadian entity.
Partnerships
Partnerships are treated as a single taxpayer for
calculation of taxable income. The calculated income
as well as CEE and CCDE deductions, and any
allocable resource allowance are then distributed
among the partners in proportion to ownership.
Joint Ventures
Unlike partnerships, joint ventures are not considered
taxable entities. Revenue and expenses are passed
directly through to the joint venturer from which
taxable income is derived. Each joint venturer
independently elects the manner in which expenses
such as CEE, CCDE and resource allowances are
handled.
Large Corporations Tax (LCT)
The federal capital tax, the LCT, has been is set at 0%
of the value of taxable corporate assets which
effectively eliminates the tax.
Goods and Services Tax (GST)
The GST rate has been reduced by one percentage
point from 6% to 5% effective January 1, 2008. A
mining company recovers the tax it has paid for goods
and services through a tax it levies on the sale of its
own products.
taxed at the lower rate, increasing to $460,000 in 2008.
The small business income threshold was increased
incrementally to $500,000 in 2009 and into 2010.
All other income by Canadian firms and all taxable
income of foreign corporations is taxable at the higher
rate.
Capital Tax
Alberta has no Capital Tax.
TA-Canada
3
SR&ED Tax Credit Market value is the estimate of the value that most
The Alberta Scientific Research and Experimental reasonably reflects the typical market value of the non-
Development (SR&ED) tax credit program provides a residential property in question.
refundable tax credit to corporations with a permanent The education portion of the property tax is uniform
establishment in Alberta. province-wide on an equalized basis. Therefore, the
assessment base varies slightly from that of the
The tax credit equal to 10 percent of the lesser of: municipalities. The 2009 uniform education millage
rates for residential/farm land fell from $4.52 to $4.04
1. the corporation’s eligible expenditures for the per $1,000 of equalized assessment. Rates for
taxation year, or commercial property fell from $6.64 to $5.94 per
2. the corporation’s maximum expenditure limit for $1,000 of equalized assessment. For machinery and
the taxation year equipment the rate is 0.00.
Rural tax rates in dollars per $1,000 assessed value
Additional details of the credit can be found at for 2009 taxes are listed by county in the following
http://www.finance.alberta.ca/publications/tax_rebates chart. These rates include the provincial Uniform
/corporate/sred1.html
Education Tax.
Minerals Royalty Alberta Rural Municipality Property 2009 Tax Rates
Alberta collects royalties on mineral production as ($/$1,000 assessed value)
noted on the following table. For most commodities, Real Property Rate Real Property Rate
one calculation method applies before capital is Acadia $14.3528 Northern Sunrise $15.4481
recovered, and another applies after capital is Athabasca 15.8700 Opportunity 24.8023
Barrhead 19.0666 Paintearth 15.4094
recovered. Capital costs are considered recovered Beaver 17.3438 Parkland 9.4988
when cumulative mine mouth revenues equal all Big Lakes 15.7040 Peace 17.0833
Bighorn 8.3960 Pincher Creek 10.4307
capital and operating costs to date, plus a cumulative Birch Hills 19.7060 Ponoka 13.8220
annual capital allowance on unrecovered investment in Bonnyville 14.1761 Provost 14.6485
each prior year. Brazeau 12.3350 Ranchland 9.4800
Camrose 15.4743 Red Deer 12.5988
Cardston 16.9204 Rocky View 9.8742
Alberta Minerals Royalty Calculations Clear Hills 19.0936 Saddle Hills 15.7963
Clearwater 9.3971 Smoky Lake 20.8689
Mineral Type Royalty Calculation Method Crowsnest Pass 14.0408 Smoky River 18.1991
Cypress 6.6455 Spirit River 19.5868
Coal - $2 x 0.275 (crown royalty adj. factor) = Elk Island 7.9212 St. Paul 20.2443
Sub-Bituminous $0.55/tonne produced Fairview 19.7296 Starland 18.0101
Flagstaff 17.8723 Stettler 15.1280
Bituminous Prior to payback: 1% of mine mouth Foothills 8.8380 Strathcona 10.9533
revenue; after payback: 1% of mine Forty Mile 12.7325 Sturgeon 11.4781
mouth revenue plus 13% of the net Grand Prairie 14.1170 Taber 10.7538
revenue derived from Crown leases. Greenview 11.3405 Thorhild 22.2458
Jasper 14.3250 Two Hills 25.8371
Kananaskis 9.8484 Vermillion River 14.5395
Kneehill 12.1646 Vulcan 14.0600
Provincial Sales Tax Lac St. Anne 24.6100 Wainright 20.8507
Alberta has no provincial sales tax. Lacombe 7.9448 Warner 12.0625
Lamont 21.1453 Westlock 23.5757
Leduc 9.9700 Wetaskiwin 15.7012
Property Tax Lesser Slave River 12.1319 Wheatland 10.3287
Property taxes in Alberta are levied by both the Lethbridge 11.2507 Willow Creek 10.7580
Mackenzie 15.4220 Wood Buffalo, ID 8.5764
Province and the municipalities. Real property is Minburn 24.0916 Wood Buffalo, RM 10.5398
subject to property tax for municipal and education Mountain View 13.5000 Woodlands 10.3031
purposes. Machinery and equipment are also subject Newell 11.3180 Yellowhead 9.6616
Northern Lights 15.4945
to municipal property tax. In 1995, municipalities in
Alberta converted from a depreciated replacement cost
to a market value standard system of assessments.

TA-Canada
4 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.
BRITISH COLUMBIA
Changes: New harmonized sales tax; new corporate
income tax rate; new property tax rates.
Corporate Income Tax
Taxable income derived from corporations in the
province is taxed at the rate of 2.5% or 10.0%
effective January, 2011. The first $500,000 of taxable
income for privately owned corporations with majority
Canadian ownership is taxed at 2.5%. All other
income by Canadian firms and all taxable income of
foreign corporations is taxable at the 10.0 % rate.
Taxable income is defined as federal taxable
income adjusted by deducting the provincial taxes paid
under the Mineral Tax Act, and adding back the
allowable federal resource allowance.
A 20% refundable mineral exploration tax credit
applies to the extent exploration expenses within the
province exceed provincial income tax otherwise
payable. The exploration must be related to
determining the existence, location, extent or quality
of a mineral resource in B.C. This applies to Canadian
corporations or B.C. residents only. Effective March
21, 2003 the credit has also been extended to
partnerships other than specified partners.
An enhanced rate of 30% is available for qualified
mineral exploration undertaken in prescribed
Mountain Pine Beetle affected areas. The prescribed
Mountain Pine Beetle affected area has been expanded
effective December 1, 2008.
Capital Tax
As of August 31, 2002 the corporation capital tax was
repealed for all but financial operators.
British Columbia Training Tax Credit Program
The Training Tax Credit program came into effect
January 1, 2007 and provides tax credits for employers
and apprentices who are engaged in eligible
apprenticeship programs administered through the
Industry Training Authority.
Mineral Land Tax
Tax rate for land not in production.
Area in hectares Tax rate per hectare
<16.2 Exempt
16.2 to 20,235 $1.25
>20,235 to 40,470 1.98
>40,470 to 101,171 2.70
>101,171 to 202,343 3.46
>202,343 to 404,686 4.20
>404,686 4.94
Mineral land in a production area is taxed at a rate of $4.94 per
hectare.
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
Mineral Tax
Under the Mineral Tax Act, mining companies pay
taxes for mines other than placer mines and quarries in
two stages.
The stage I tax is 2% of net current proceeds defined
as (the current year's gross revenue less operating
costs.) Operating costs are all current operating costs,
but do not include expenses due to capital investment
such as pre-production exploration and development
expenses. If the mine has an operating loss, no net
current proceeds tax (stage I tax) is payable.
After the company's investment and a reasonable
return on investment have been recovered, the
company must pay the stage II tax of 13% of an
adjusted net revenue, essentially the net current
proceeds from stage I tax computations from the mine.
The stage I tax is deducted from the stage II tax owed,
so the maximum tax does not exceed 13%.
Any previous stage I tax paid is deductible from the
stage II tax owed. It can be carried forward
indefinitely.
British Columbia Mining Exploration Tax Credit
(BC METC)
The credit applies to exploration for all base and
precious metals, coal and some industrial minerals.
The corporation or partnership must incur qualified
mining exploration expenses before January 1, 2017
for determining the existence, location, extent, or
quality of a mineral resource in British Columbia.
Expenditures incurred by a mine operator that are
for the purpose of determining the existence, location,
extent or quality of a mineral deposit in British
Columbia can be deducted from Net Revenue.
Exploration costs must be incurred after
commencement of commercial production from one or
more mines by the operator.
To encourage new mine development in the
province, the new mine allowance provides for an
allowance of one-third of the capital costs of new
mines and expansions of existing mines that begin
production in reasonable commercial quantities before
January 1, 2016. On February 20, 2007, the provincial
government introduced legislation to provide an
enhanced rate of 30% for qualified mineral exploration
undertaken in prescribed Mountain Pine Beetle
affected areas.
TA-Canada
5
Harmonized Sales Tax Following are the 2010 tax rates for major
On July 1, 2010, the Provincial Sales Tax (PST) and manufacturing in each region with a municipal tax
the 8% component of the Hotel Room Tax were ($/$1,000 valuation). Outside of these municipalities,
replaced with the Harmonized Sales Tax (HST). The tax rates are much lower.
HST is 12% in British Columbia, consisting of the 5%
Major Industry British Columbia Regional District
federal portion and a 7% provincial portion. 2010 Property Tax Rates
Certain capital property such as machinery, ($/$1,000 valuation)
equipment may be eligible for an input tax credit.
Regional District Minimum Maximum Mean 1
Alberni-Clayoquot $17.38 $64.49 $40.94
Property Tax Bulkley-Nechako 46.00 68.59 60.52
Capital 18.46 41.95 25.15
The assessed value used to determine property tax is Cariboo 29.18 99.23 68.43
made up of two parts, land and improvements. Central Kootenay 16.39 53.13 32.59
Machinery and equipment at a mine site are not Central Okanagan 20.20 25.34 22.45
Columbia Shuswap 32.67 62.14 45.26
assessable and therefore not subject to taxation. The Comox-Strathcona 20.51 27.94 24.97
assessable value of land is the current real estate Cowichan Valley 51.86 96.98 80.46
market value of the property. Buildings and other East Kootenay 19.14 65.35 42.48
Fort Nelson-Liard 2 --- --- ---
assessable improvements are valued at original cost Fraser Valley 20.61 21.94 21.43
less an allowance for straight-line depreciation at 6.5% Fraser-Ft George 41.62 59.04 50.33
Greater Vancouver 12.09 70.34 34.20
per annum. Cumulative depreciation cannot exceed Kitimat-Stikine 44.67 95.15 77.28
80% of the original cost of the facilities. Kootenay-Boundary 29.08 56.70 45.09
Major industry facilities in rural areas, outside of Mount Waddington 31.66 35.81 33.73
Nanaimo 16.76 38.34 25.26
municipalities pay a general, province-wide tax of North Okanagan 23.10 36.10 33.82
$7.00 for schools based on $1,000 assessed value. Northern Rockies 3 --- --- ---
Other millage rates, which include municipal, Okanogan-Similkameen 14.36 43.40 24.61
Peace River 27.82 62.40 40.63
sewer, hospital, and fire protection add to this and are Powell River 30.41 30.41 30.41
included in the following table. Actual rates vary Skeena-Q. Charlotte 26.90 50.11 40.60
Squamish-Lillooet 34.06 35.83 34.94
substantially, depending upon applicable assessments Sunshine Coast 22.71 22.85 22.79
at a specific locality. Thompson-Nicola 18.01 78.28 39.97
Average Rural BC 26.63 53.67 39.93
Other adjustments include: 1
• A $10,000 standard deduction Simple arithmetic mean of all taxing municipal districts in the
region.
• Pollution abatement facilities - tailings ponds are 2
See the Northern Rockies regional district.
not assessable if built prior to 1997 3
There are no manufacturing entities in this district and no tax
• Equipment and machinery are not assessable. rate has been established.

MANITOBA

Changes: Elimination of the small business income Corporation Capital Tax

tax.
Corporate Income Tax
Corporate taxable income allocated to Manitoba is
taxed at 12.0% as of July, 2009. The first $400,000 of
taxable income from Canadian controlled private
corporations that qualifies for the federal small
business deduction was taxed at 1% but was
eliminated on December 1, 2010. The capital cost
allowance for manufacturing buildings was increased
from 4% to 10% on assets acquired after March 18,
2007.
Corporations in Manitoba with paid-up taxable capital
of at least $10 million are subject to the 0.2%
Manitoba Corporation Capital Tax (CCT). Manitoba
currently provides a deduction for the first $10 million
in capital. Corporations with taxable capital of at least
$20 million (less the $10 million deduction) are
subject to a rate of 0.4%.
Subject to balanced budget requirements, the
general Corporation Capital Tax, except for Crown
Corporations, will be eliminated as of December 31,
2010.
For fiscal years beginning after January 1, 2009 the
capital tax is calculated as follows:

TA-Canada
6 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.
 a) 0.1% of the taxable paid up capital of the
corporation at the close of the fiscal year, if it does
not exceed $10 million; or
b) $10,000 plus 2.3% of the taxable paid up capital
at the close of the fiscal year in excess of $10
million, if the amount of taxable paid up capital
exceeds $10 million, but does not exceed $11
million; or
c) 0.3% of the taxable paid up capital at the close of
the fiscal year, if it exceeds $11 million.
Taxable paid-up capital generally includes capital
stock, surpluses, reserves, shareholders’ advances and
loans, bank loans, long-term indebtedness and other
indebtedness, but excludes current accounts payable.
For purposes of applying the tax, the paid up capital
is the aggregate of these amounts on the year end
balance sheet.
A capital cost allowance for manufacturing
equipment is changed from 30% declining balance to
50% straight line on assets acquired after March 18,
2007 and before 2009; CCA for manufacturing
buildings is increased from 4% to 10% on assets
acquired after March 18, 2007.
Effective July 1, 2008, the CCT was eliminated for
corporations that use more than 50% of their labour
and capital in the province for manufacturing and
processing activities as defined by the Income Tax Act
(Canada).
Mining Tax
Effective for fiscal years ending after June 30, 2009,
the mining tax rate was reduced from 18% to the
following graduated rates:
• 10% when total operator’s profit is less than $50
million
• 15% when total operator’s profit is between $55
and $100 million
• 17% when total operator’s profit is over $105
million.
Operators with total profit between the tax thresholds
will pay at the following notch rates:
• For total profit of $50 to $55 million:
Tax = $5 million + 65% x (total profit - $50 million)
• For total profit of $100 to $105 million:
Tax = $15 million + 57% x (total profit - $100)
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
Mining profit is defined as resource revenues minus
operating expenses and allowances for depreciation,
exploration and processing. Oil and gas, rock, gravel,
clay, peat and gypsum producers do not pay the
Mining Tax. Credits deducted in the current year
reduce the depreciable asset base (or pool) by a similar
amount in the following year.
New mines are exempt from the mining tax until
the amount of the operator’s profits, excluding the
allowance for depreciation, exceed the total cost of
depreciable assets of the mine acquired before
commercial production, including pre-production
development expenses. A depreciation allowance of
up to 20% per annum of the un-depreciated capital
cost of depreciable assets may be deducted. In the
case of a short lived mine, the annual depreciation rate
can be increased to as much as 60% of the value of the
assets, upon approval of the Lieutenant-Governor in
Council.
Exploration expenses may be deducted in full.
Exploration expenses to discover new ore bodies not
deducted in the current year may be carried forward
and deducted in future years. An additional 50%
exploration deduction may be taken on the amount by
which the current year expenditures exceed the
average of the previous three years.
The processing allowance is 20% of the original
cost of processing buildings, machinery and equipment
within the province, or 8% of the cost of processing
facilities outside the province. The processing
allowance cannot exceed 65% of net income prior to
the allowance.
Manitoba has an additional mining tax of 0.5% of
in-province mining profits. This tax does not apply to
firms with Manitoba operations solely, and it is
prorated based on the percentage of in-province
operations for firms operating both in and out of
Manitoba. This tax is offset by Manitoba corporate
income tax otherwise payable.
Property Tax
Mining properties in Manitoba are required to either
pay a grant in lieu of taxes by way of an individual
agreement with the municipality in which they
operate, or in absence of an agreement are subject to
assessment and subsequent real property taxes.
Equipment related items are considered personal
property and are not subject to assessment under The
Municipal Assessment Act of Manitoba unless
provided for by the passing of a municipal bylaw
naming the personal property to be assessed.
Retail Sales Tax
The Retail Sales Tax is a 7% tax applied to the retail
sale or rental of most goods and certain services in
Manitoba. The tax is calculated on the selling price,
TA-Canada
7
before the Goods and Services Tax (GST) is applied.
It is separate from and is not harmonized with the
GST. There are exemptions for:
• drill bits and explosive materials used for
exploration for minerals, or development
activities directly related to mining for minerals
(as defined in The Mining Tax Act).
• geophysical survey aircraft, or geophysical
survey or exploration equipment other than a
drill rig, that is designed and used solely for
prospecting or exploration for minerals.
• prototype equipment purchased and used to
research and develop new mining technologies
for minerals. To qualify for the exemption,
mining companies must obtain written approval
(that the equipment qualifies) from the Taxation
Division prior to purchase.
• “direct agents” that are consumed to the point of
dissipation in the transformation or manufacture
of a product while in direct contact during the
NEW BRUNSWICK
Changes: New corporate income tax rate; new
provincial, real property and municipal property tax
rates.
Corporate Income Tax
The New Brunswick general corporate income tax rate
as of July 1, 2010 is 11% of corporate taxable income
and is planned to be further reduced by 1% each year
to 8% by July 1, 2012. The small business corporate
income tax rate is 5% which applies to the first
$500,000 of active business income for Canadian
controlled private corporations (CCPC) with less than
$10 million in taxable capital. The small corporation
rate is increased for CCPC’s with net worth greater
than $10,000,000 and goes to zero at a worth of
$15,000,000.
Large Corporations Capital Tax
In 2009, the New Brunswick Large Corporation
Capital tax was eliminated.
Harmonized Sales Tax
In 1997, the sales tax was "harmonized" with the
federal good and services tax (GST). The harmonized
sales tax (HST) combines the provincial sales tax and
TA-Canada
8 COAL COST GUIDE
manufacturing process with the materials being
transformed or manufactured into a product for
sale
• electricity used directly for mining and
manufacturing activities is exempt from
provincial sales tax.
The Tax Administration and Miscellaneous Taxes
Act (formerly the Revenue Act)
Purchases of electricity, coal, natural and
manufactured gas delivered by pipeline are taxed at a
rate of 7%. The revenue tax rate reduction program
reduces the tax paid on electricity used directly for
manufacturing and mining in Manitoba. The program
allows the electricity dealer to apply tax at the 7% rate
to only 20% of the billing for these businesses. To
qualify for the tax rate reduction, a business must file
an application with the Taxation Division showing that
the business is primarily engaged in manufacturing or
mining activities and that less than 50% of its sales are
retail sales.
the GST into a single, combined value-added tax. The
tax is 13% (5 percentage points representing the
federal component and 8 percentage points the
provincial component). The tax is administered by
Canada Revenue Agency on behalf of the province.
Most businesses receive an input tax credit on the
HST paid on business inputs, i.e. materials and
services a firm purchases which become a part of
products sold by the firm.
Property Tax
The market value of land, buildings and
improvements, but not including mine revenues, ore,
equipment, machinery, or underground improvements,
are subject to taxation. In 2002, the tax laws were
modified to exclude from the tax base internal power
distribution for processing machinery and any
processing machinery foundations.
The tax contains a provincial and a local
(municipal) component. The non-residential
provincial component is $2.25 per $100 valuation
throughout the province. For total taxes levied add
the provincial rate to the municipal rate.
The municipal non-residential tax rates for all
cities, towns and villages are in the following chart.
Copyright © 2011 InfoMine USA, Inc.
 Municipal Non-Residential Tax Rates 2011 Municipal Non-Residential Tax Rates 2011
($/$100) ($/$100)

CITIES VILLAGES
Bathurst $2.6325 Miramichi $2.5457 Charlo $2.0934 Petitcodiac $1.9191
Campbellton 2.6256 Moncton 2.4704 Chipman 1.9877 Perth Andover 1.8450
Edmunston 2.3505 Saint John 2.6775 Clair 1.6271 Perth-Rocher 2.1873
Fredericton 2.1225 Doaktown 1.9050 Plaster Rock 2.3342
Dorchester 1.2250 Pointe-Verte 2.3250
TOWNS Drummond 1.8083 Port Elgin 1.9463
Beresford $2.3390 Richibucto $1.9167 Eel River Rexton 1.8344
Bouctouche 1.7513 Riverview 2.3553 Crossing 1.9200 Riverside-Albert 1.9689
Caraquet 2.2076 Shippagan 2.2350 Fredericton Riviere-Verte 1.8002
Dalhousie 2.4627 Rothesay 1.8150 Junction 1.9425 Rogersville 2.1974
Dieppe 2.3468 Sackville 2.3025 Gagetown 1.8300 Saint-Antoine 1.8138
Grand Bay/Westfield 2.0550 St. Andrews 1.6466 Grand Manan 1.6586 Saint-Francois-
Grand Falls/ Saint Leonard 2.2533 Grande Anse 2.0640 De-Madawaska 2.0739
Grand Sault 2.1714 Saint Quentin 1.9950 Harvey 1.6269 Saint-Hilaire 1.6341
Hampton 1.8750 Shediac 2.2175 Hillsborough 2.0190 Saint-Isidore 1.8611
Hartland 2.2233 Saint George 1.8750 Kedgwick 2.2301 Saint-Louis-
Lameque 2.2500 Saint Stephen 2.3250 Lac Baker 1.5078 De-Kent 2.0784
Nackawic 1.9166 Sussex 1.8834 Le Goulet 2.3961 Sainte-Anne-
Oromocto 1.8561 Tracadi-Shelia 2.0850 Maisonnette 2.1188 De-Madowaska 2.1902
Quispamsis 1.8105 Woodstock 2.1275 McAdam 2.5104 Sainte-Léolin 2.2481
Meductic 1.5104 Sainte-Marie-
VILLAGES Memramcook 2.0718 Saint Raphael 2.2200
Alma $1.9641 Bertrand $2.1570 Millville 2.0520 Salisbury 1.3482
Aroostook 1.8450 Blacks Harbor 2.3271 Minto 1.8750 St. Martins 1.8503
Atholville 1.8552 Blackville 1.8983 Neguac 1.9074 Stanley 2.0138
Baker Brook 2.0798 Cambridge- New Maryland 1.7639 Sussex Corner 1.7400
Balmoral 2.1437 Narrows 1.6020 Nigadoo 2.0625 Tide Head 2.0850
Bas-Caraquet 2.1443 Canterbury 1.9346 Norton 1.7532 Tracy 1.7850
Bath 2.1525 Cape Pele 1.8006 Paquetville 1.8036
Belledune 1.6344 Centerville 1.7996

NEWFOUNDLAND/LABRADOR

Changes: New small business tax rate and threshold.
Corporate Income Tax
Federal taxable income for operations in the province
is taxed at the rate of 14% with a reduced rate of 5%
for manufacturing and processing and 4% for small
businesses.
The small business threshold is the first $500,000
of taxable income in the province, for Canadian
controlled private corporations. Taxable income in
excess of the threshold is fixed at the higher rate.
Capital Tax
Only financial institutions are subject to a capital tax
in Newfoundland.
Payroll Tax
A payroll tax, at a rate of 2%, is payable by employers
whose annual remuneration in this province exceeds
the predetermined exemption threshold. Effective
January 1, 2008 the exemption threshold was
increased to $1 million for all employers.
Newfoundland Mining and Mineral Rights Tax
Newfoundland taxes mining net income derived from
within the province at a rate of 15% after a deduction
of the greater of 20% of net income or royalties paid
by the operator. The royalties paid and any remainder
up to the 20% deducted earlier, are taxed at 20%.
Therefore, if no royalties are paid by the mine, the
effective tax rate is 16%.
Mining taxable income is defined as revenues less
operating costs, depreciation not to exceed 25% of
undepreciated investment, and a processing allowance
equal to 8% of the processing assets value; plus 15%
of smelting assets value but not to exceed 65% of the
taxable income, and the greater of 20% of the gross
income less the deductions above or royalties paid to
other entities other than the province.
Mining assets at new mines are allowed up to 100%
depreciation, as in the federal corporate tax
calculation. All other assets including processing
assets after the primary crusher at new or existing
mines are subject to 25% declining balance
depreciation.
New mines are granted a ten year tax holiday
during which a credit equal to the provincial corporate
tax can be deducted from the provincial mining tax
liability. The allowable credit cannot exceed
$2,000,000 per year in this 10 year period. This ten
year period commences with the start up of
commercial production.

TA-Canada
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE 9
Harmonized Sales Tax There are 286 tax districts in Newfoundland, 226 of
The harmonized sales tax (HST) is a single, combined which currently levy taxes. Following are some
value-added tax. The tax rate is 13% (5 percentage representative business mill ($/$1000 valuation) rates
points representing the federal component and 8 for 2007:
percentage points the provincial component). The tax
Districts Mill Rate Districts Mill Rate
is administered by Revenue Canada on behalf of the Anchor Point $9.50 Little Bay Islands $14.00
province. Baie Verte 11.00 Norman's Cove 10.00
Buchans 16.00 Pasadena 3.10
Corner Brook 20.10 Paradise 9.60
Property Tax Cow Head 9.00 Port Anson 9.00
The market value of real property and some mine Daniels Harbor 9.00 River of Ponds 0.00
Deer Lake 4.80 South Brook 10.00
gross revenues are subject to property taxes if within Flatrock 7.50 Stephenville 7.10
an incorporated town or municipality. Some Gander 6.35 Trinity Bay 10.00
municipalities have replaced the standard property tax Grand Falls-Windsor 10.25 Torbay 12.00
Labrador City 18.75 Wabush 24.00
with a "municipal business tax" based on the gross Lewisporte 3.30 West Port 9.00
revenues from the sale of goods. Most major mines
are outside the boundaries of towns or municipalities
and thus are not subject to property tax.

NORTHWEST TERRITORIES

Changes: New property tax rates. less than $10,000 0%

Editors Note: In settlement of aboriginal land claims
the Canadian government divided the Northwest
Territories into two territories. On April 1, 1999, the
eastern two thirds of the Northwest Territories became
Nunavut. The government seat for the new territory is
in Iqaluit, formerly Frobisher Bay. The western
portion of the Northwest Territories carries the original
name Northwest Territories, with the capital at
Yellowknife. For discussion of taxes applicable in the
new territory see Nunavut later in this section.
Corporate Income Tax
Federal taxable income derived from operations in the
territory is taxed at the rate of 4% or 11.5%. The first
$500,000 of taxable income for privately owned
corporations with majority Canadian ownership is
taxed at 4%. All other income by Canadian firms and
all taxable income of foreign corporations is taxed at
11.5%. This tax is collected by the Canada Revenue
Agency in conjunction with the federal income tax.
Capital Tax
Northwest Territories (NWT) has no capital tax.
Northwest Territories Mining Tax
The Northwest Territories mining tax is based on the
annual value of mine output as defined below. The tax
paid is calculated from mine output using the
following table. The actual tax paid is the lesser of
13% of mine output or the tax calculated from the
following table.
$10,000 - $5,000,000 5%
$5,000,000 - $10,000,000 6%
$10,000,000 - $15,000,000 7%
$15,000,000 - $20,000,000 8%
$20,000,000 - $25,000,000 9%
$25,000,000 - $30,000,000 10%
$30,000,000 - $35,000,000 11%
$35,000,000 - $40,000,000 12%
$40,000,000 - $45,000,000 13%
greater than $45,000,000 14%
Mine output valuation is determined as the amount of
sales plus net year end inventories less mining,
milling, processing, transportation and marketing
costs.
The Northwest Territories mining tax is in reality a
federal royalty, payable to the federal government.
Allowable deductions include mine operating
expenses, smelting and refining charges, transportation
costs, exploration and development costs, mine and
mill asset depreciation (not to exceed the un-deducted
asset value), pre-production expenses up to 100% of
pre-production prospecting, exploration, and
development costs, and a processing allowance.
The processing allowance applies only if the
mineral is treated in NWT and is the lesser of 8% of
the original cost of the processing assets or 65% of the
value of the output prior to this allowance. If
exploration costs in NWT were not claimed in the year
incurred they may also be deducted in the current year
provided they do not exceed 10% of the total value of
the mine output before this deduction. The royalty is
due on April 30 of the following year.

Mine Output Rate

TA-Canada
10 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.
Territorial Sales Tax
Northwest Territories has no sales tax.
Property Tax
Taxable real property of mining operations in the
Northwest Territories includes land, improvements,
mobile homes, works, transmission lines and railways.
Dams, dikes and mining excavations are not
assessable. Following are the mineral and education
2010 rates for the most significant municipalities.
Municipality Tax Rate ($/$1000)
Fort Simpson
Fort Smith
Hay River
NOVA SCOTIA
Changes: New property tax rates; new small business
tax rate; increased provincial tax rate
Corporate Income Tax
Federal taxable income derived from operations in the
province is taxed at the rate of 4.5% or 16%. The first
$400,000 of taxable income for operations of
Canadian controlled private corporations (CCPC) in
the province is taxed at 4.5%. All additional income
by CCPCs and all taxable income of foreign
corporations is taxed at 16%. This tax is collected by
Revenue Canada in conjunction with the federal
income tax.
Canadian owned corporations are also granted a
three year tax holiday during which corporate income
tax is not payable on the first $400,000 of income
annually.
Large Corporation Tax
Assessable capital for corporate operations in the
province is taxed at the following rates:
Effective July 1, 2010 thru June 30, 2011:
First $5 million 0.00%
Next $5 million 0.20%
If > $10 Million, all capital 0.10%
Effective July 1, 2011 thru June 30, 2012:
First $5 million 0.00%
Next $5 million 0.10%
If > $10 Million, all capital 0.05%
Assessable capital is as defined by federal capital
tax regulations. It is essentially retained earnings,
paid-up capital, and long term debt. The capital tax is
scheduled to be eliminated, July 1, 2012. The tax due
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
Municipality Tax Rate ($/$1000)
Inuvik $14.53
Norman Wells 15.25
An "Other” NWT rate of 16.35 mills (2008) is levied
by the territorial government on all operations in rural
areas outside of the municipalities. The basis for
personal property and buildings and improvements is
capital cost less depreciation. The depreciation rates
are as defined by Alberta provincial government tax
regulations adjusted to reflect costs in the territory.
Within municipalities land is valued at market value.
$13.38 In other portions of the Northwest Territories it is
14.46 valued on the basis of development costs.
13.19
will be prorated for firms whose fiscal year straddles
this date. Nova Scotia had a user fee increase of 6.0%
effective April 1, 2007.
Nova Scotia Mining Royalties
Coal mining producers pay royalties at $1.07/short
ton. Net revenue is defined as the value of products
produced less:
• All marketing costs,
• Product transportation costs
Net income is defined as net revenue less:
• All mine and mill operating costs
• Mine equipment depreciation
• Processing allowance equal to 8% of
processing facility investment
• Reclamation costs
• Mine related administration costs
Notwithstanding the royalty rates shown, the Minister
of Natural Resources can designate a per ton rate for
individual mines. This would then apply in lieu of the
rates previously designated.
Harmonized Sales Tax
Nova Scotia’s provincial 8% sales tax has increased to
10% effective July 1, 2010. The tax has been
harmonized with the 5% (reduced from 6% effective
January 1, 2008) Federal Goods and Services Tax
(GST). The combined Federal and Provincial value
added tax of 15% is called the Harmonized Sales Tax
(HST).
The HST is paid on machinery and supply
purchases. However, as with the Federal GST rules,
the cost of HST paid on machinery and supply inputs
can be recouped through a tax credit if the firm
TA-Canada
11
produces a taxable product. Input tax credits reduce Following are the 2009/2010 commercial tax rates
the net tax on most firms machinery and supply for the regional municipalities. The rates denoted in
purchases to zero. dollars per $100 valuation, do not include the Business
The HST is not charged on the price of foreign Occupancy rates. However, the Business Occupancy
exports. Mineral products sold outside the harmonized rates are normally similar or the same as the
region (NS,NB,NL), but within Canada are charged commercial rates.
the 5% federal GST component. The HST applies to The business occupancy rate was phased out in
sales within the province and other harmonized areas. 2010.
Municipalities Tax Rate ($/$100)
Property Tax
The market value of real property is assessed under Regional
basic property tax rules and again under business Cape Breton Rural $ 4.67 New Waterford $4.67
City Sydney 5.31 North Sydney 4.67
occupancy assessment rules. The tax rates for the Dominion 4.468 Region of
business occupancy assessment are the same as for the Glace Bay 4.67 Queens 1.99- 2.96
Halifax Regional 3.22 - 3.71 Sydney Mines 4.67
basic property tax, but the basis of the business Louisbourg 4.67
occupancy assessment is only 50% of the realty
assessed value. The effect of the business occupancy Rural
Annapolis $1.80 Hants, West $1.57
assessment is essentially a 50% increase in the Antigonish 1.48 Inverness 1.85
property taxes. Argyle 2.20 Kings 2.16
Market value for land is determined as the current Barrington 2.63 Lunenburg 1.92
Chester 1.51 Picton 1.71
real estate value for the surface. Buildings, structures, Clare 1.98 Richmond 1.90
and improvements are assessed at reproduction value Colchester 2.10 Shelburne 1.82
Cumberland 2.47 St. Mary's 2.12
less depreciation. Machinery and equipment are not Digby 1.85 Victoria 2.19
subject to taxation. Additional information can be Guysborough 2.35 Yarmouth 2.15
obtained through http:/www.gov.ns.ca. There are 55 Hants, East 2.67
municipalities in the province. Each establishes and
collects its own taxes.

NUNAVUT

Change: New lower tax rate threshold. Nunavut Territory Mining Tax
In Nunavut, as in the Northwest Territories, mines on
Corporate Income Tax crown lands are subject to the territorial mining tax
Federal taxable income derived from operations in the based on the value of mine output as defined below.
territory is taxed at the rate of 4% or 12%. The first If located in Inuit lands, the royalty is negotiated with
$500,000 of taxable income for privately owned the local authorities. Mines on claims that existed
corporations with majority Canadian ownership is prior to establishment of Nunavut can choose between
taxed at 4%. All other income by Canadian firms and these two tax regimes. The crown lands tax due is
all taxable income of foreign corporations is taxed at calculated from the following table; however, the
12%. This tax is collected by Revenue Canada in actual tax due is the lesser of 13% of mine output or
conjunction with the federal income tax. the value calculated using the table.
Employers who operate a business in Nunavut and
provide qualified training can claim at least 30% of Mine Output Rate
less than $10,000 0%
their allowable training expenditures as a refundable $10,000 - $5,000,000 5%
tax credit. Where the training is for a beneficiary of the $5,000,000 - $10,000,000 6%
$10,000,000 - $15,000,000 7%
Nunavut Land Claims Agreement, the employer can $15,000,000 - $20,000,000 8%
claim 50% of these expenditures as a refundable tax $20,000,000 - $25,000,000 9%
credit. $25,000,000 - $30,000,000 10%
$30,000,000 - $35,000,000 11%
$35,000,000 - $40,000,000 12%
Capital Tax $40,000,000 - $45,000,000 13%
Nunavut Territory has no capital tax, however the 5% greater than $45,000,000 14%
Federal GST still applies.
In general, mine output valuation is determined as total sales, plus product inventory less mining,
TA-Canada
12 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.
processing, marketing and transportation costs. The
mining tax is in reality a federal royalty, payable to the
federal government. Allowable deductions include
mine operating expenses, smelting and refining
charges, transportation costs, exploration and
development costs, mine and mill asset depreciation
(not to exceed the undeducted asset value), pre-
production expenses (up to 100% of allocable pre-
production prospecting, exploration, and development
costs), and a processing allowance.
The processing allowance applies only if the
mineral is treated in Nunavut and is the lesser of 8% of
the original cost of the processing assets or 65% of the
value of the output prior to this allowance. If
exploration costs in Nunavut were not claimed in the
year incurred they may also be deducted in the current
year provided they do not exceed 10% of the total
value of the mine output before this deduction.
Fuel Tax Rebate
Every person or entity who is engaged in mineral
exploration may be eligible for a fuel tax rebate on
fuel used in unlicensed machinery, equipment and
registered snowmobiles and ATV’s used in mineral
exploration. The rebate applies to fuel purchased and
consumed on and after April 1, 2006. The fuel must
ONTARIO
Changes: New HST tax; lower corporate income tax;
new provincial land tax; new property tax multipliers;
elimination of the capital tax.
Corporate Income Tax
Effective July 1, 2010, the lower rate of Ontario
income tax was reduced to 4.5% and the basic rate was
reduced to 12%. The basic rate will further be reduced
until it reaches 10% on July 1, 2013.
The small business incentive rate, a reduction of the
general rate, is applied to the first $500,000 of taxable
income of a Canadian controlled private corporation
(CCPC) derived from operations in the province. If
taxable income for a CCPC is greater than $500,000
the rate is gradually increased and is equal to the
general tax rate if taxable income equals or exceeds
$1,500,000.
In contrast the preferential manufacturing and
mining rate results from deducting a 2.0% tax credit
from the general tax rate. The calculation resulting in
the least tax owed is the one used for an actual tax
calculation in each instance.
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
have been purchased in Nunavut or have been
imported into the territory as per section 3, 4 and 5 of
Petroleum Products Tax Act (Nunavut). The applicant
must have a current Prospecting License.
Nunavut Per Litre Rate of Tax
Zone B Gasoline 6.4 cents
Diesel Motive 9.1 cents
Diesel Non-Motive 3.1 cents
Aviation Fuel 1.0 cents
Other Fuel 3.1 cents
Provincial Sales Tax
Nunavut has no territorial sales tax.
Property Tax
Taxable real property of mining operations in Nunavut
includes land, improvements, mobile homes, works,
transmission lines and railways. Dams, dikes and
mining excavations are not assessable.
The current tax rate since 2005 of $9.76 per $1000
valuation is established for mining in Nunavut.
The basis for personal property and buildings and
improvements is capital cost less depreciation. The
depreciation rates are as defined by Alberta provincial
government tax regulations. Within municipalities
land is valued at market value. In other portions of the
Nunavut Territory it is valued on the basis of
development costs.
Taxable income is defined as federal taxable
income with the following modifications:
1) Exploration and development expenses for
foreign properties are not deductible, but added
to the cost basis of the property.
2) Foreign resource dispositions are treated as
capital gains/losses rather than as income items.
Seventy-five percent of the capital gains/losses
are included in taxable income.
3) One-hundred percent of Canadian exploration
and development expenses are deductible if the
corporation is a principal business corporation
(otherwise the greater of twenty percent of these
expenses or the income from such properties).
4) One-hundred percent of exploration and
development expenses are deductible if incurred
in Ontario.
Corporate Minimum Tax (CMT)
TA-Canada
13
If a corporation's total revenue exceeds $10 million or Provincial Land Tax
total assets exceed $5 million, it is subject to the The Provincial Land Tax (PLT) is a property tax
corporate minimum tax. Effective July 1, 2010 the imposed on land located in the unincorporated
CMT rate is reduced from 4% to 2.7% of the corporate territories of Ontario which do not have municipal
adjusted net income attributed to operations in representation. The current rate for industrial property
Ontario. The tax paid equals the amount the CMT is 0.00037936.
exceeds the regular corporate income tax and is
creditable against normal provincial income tax Property Tax
payable in the subsequent ten years. The market value of land and improvements, including
buildings, but excluding machinery and equipment for
Capital Tax mining companies, are taxed at varying rates.
The capital tax was completely eliminated on July 1, Buildings are depreciated straight-line according to 40
2010. to 60 year life tables.
There are also obsolescence allowances which are
Provincial Mining Tax standard for all industrial property, and market
Income from mining operations in Ontario is generally adjustment factors are applied depending on the area
taxed at the rate of 10%. An exemption from tax is of the building. Current tax rates are so varied
provided on the first $500,000 of income. New or throughout the province that readers are advised to
expanded operations are also exempt from paying this contact regional assessment offices listed in this
tax on the first $10,000,000 of profit within the first section for local information.
three years of production. For remote locations, the Province wide increase caps were instituted at 5%
tax holiday has been extended to 10 years or until for 2000 and subsequent years.
$10,000,000 in profit is reached, and following the tax
holiday period the tax is calculated using a reduced Ontario Industrial 2010 Tax Rates
rate of 5%. * 2008 Rate ** 2009 Rate
Income is defined as gross revenue received from
the output of the mine less: Area/Municipality Multiplier1
Brampton - Industrial 0.02998738
Cobalt - Commercial * 0.07536750
• costs of production, Elliot Lake - Industrial- Urban * 0.11963862
• processing and transportation costs, Elliot Lake - Industrial - Rural * 0.09024388
Guelph - Industrial 0.05017400
• a depreciation allowance for mine assets (but not Havelock - Township - Industrial 0.03336022
processing or transportation assets) at 30% Kirkland Lake - Industrial ** 0.07487300
straightline or, if acquired prior to start-up, 100%, Lakehead Board - Industrial * 0.03764468
Manitouwadge - Industrial * 0.09264372
not to exceed the mine income, Marathon - Industrial * 0.08438143
• a depreciation allowance for processing and Matachewan - Industrial ** 0.06490246
transportation assets on a 15% straight-line basis, Oshawa - Industrial 0.05144417
- Large Industrial 0.05144417
• up to 100% of exploration and development Perth - Industrial * 0.06674408
expenses in the year incurred or carried forward Red Lake - Industrial * 0.07054588
• processing allowances of 8-20% of concentrating Sault Ste. Marie
- Industrial Urban 0.05832505
assets, and smelting and refining assets, not to - Industrial Rural 0.05655152
exceed 65% of mining and processing revenue Sault Ste. Marie
after all costs have been deducted. The reduction - Large Industrial Urban 0.08310855
allowed depends upon the facility's location. - Large Industrial Rural 0.08059566
Sudbury
- Large Industrial-City 0.06306606
No deductions are allowed for dividends, interest - East Valley 0.05989469
- Unorganized 0.05651747
expense, provincial mining or capital taxes, royalties - All Others 0.05813180
paid, depletion, or certain non-mining related Temagami - Industrial * 0.05348995
administrative expenses. Timmins - Industrial * 0.06495737
West Lincoln - Large Industrial Rural ** 0.05617072

Provincial Sales Tax Ontario Regional Assessment Offices Telephone Numbers

Generally purchases of goods and services in Ontario Aurora (905) 727-3755
are taxed at 8%. This tax has been harmonized with Barrie (705) 728-2270
the 5% Federal Goods and Services Tax (GST),
Bracebridge (705) 645-5204
effective July 1, 2010, which yields a combined HST
rate of 13%. Brantford (519) 759-6310
(continued next page)

TA-Canada
14 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.
 Ontario Regional Assessment Offices Telephone Numbers Ontario Regional Assessment Offices Telephone Numbers
Brockville (613) 342-8242 North Bay (705) 474-6150
Cambridge (519) 623-5210 Ottawa (613) 742-4482
Chatham (519) 354-5460 Owen Sound (519) 371-1121
Cornwall (613) 933-7100 Pembroke (613) 725-0181
Durham (905) 432-8444 St. Catharines (905) 688-0233
Etobicoke (416) 621-9400 Sault Ste. Marie (866) 296-6722
Godevich (519) 198-1997 Scarborough (416) 292-5244
Guelph (519) 821-7440 Sudbury (705) 675-4200
Hamilton (905) 521-7469 Thunder Bay (807) 343-7200
Kingston (613) 545-4475 Timmins (705) 264-9455
Lidsay (705) 324-1622 Toronto (416) 327-1800
London (519) 681-0500 Trenton (613) 392-2501
Mississauga (905) 270-8050 Windsor (519) 254-3771

PRINCE EDWARD ISLAND

Changes: Lower corporate tax rate; new property tax

rates. Property Tax
The market value of land and the depreciated value of
Corporate Income Tax buildings and improvements are subject to property
Taxable income derived from operations in the tax. Machinery and equipment and subsurface assets
province as of April 1, 2009 is taxed at the rate of are not included.
2.1% or 16%. As of April 1, 2010 the lower rate was As mining is non-existent in the province, applicable
reduced to 1.0%. The first $300,000 of taxable income rates do not exist. Selected tax rates for commercial
for operations in the province of Canadian controlled property have been listed below to suggest what the
private corporations is taxed at the lower rate. tax rate may be if a mine were developed.
Taxable income is defined as federal taxable income
with some modification. Most notably, the province 2010 Tax Rate ($/$100)
Area
allows an investment tax credit equal to 10% of the Afton $1.620
cost of new machinery and equipment. As with the Alberton 2.550
federal government any unused investment credit can Belfast 1.700
Charlottetown 3.860
be carried back 3 years and forward 10 years. Cornwall 2.310
Georgetown 3.200
Hampshire 1.595
Capital Tax Kensington 2.800
Although Prince Edward Island has a capital tax of Montague 2.380
3%, it applies only to financial institutions. Mining Murray River 2.000
Souris 3.200
operations on the island are not subject to this tax. Summerside 3.600
Tyne Valley 1.950
Provincial Mining Tax Victoria 2.300
York 1.660
Prince Edward Island has no specific mining tax. Provincial * 1.500

Revenue Tax (PST) - Sales Tax * This rate applies province-wide in addition to local taxes, and
Purchases of goods and services are subject to a 10% is included in the tax rates above.
sales tax. The basis includes the purchase price plus
the federal goods and services tax (GST). PEI is the
only Atlantic province that has not harmonized its PST
with the federal GST, and allowed Revenue Canada to
collect and disburse the funds.

TA-Canada
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE 15
QUÉBEC
Changes: Capital tax abolished for 2011; new sales
tax rate; new property tax rates.
Corporate Income Tax
Effective January 1, 2009 the general Québec
provincial corporate income tax rates are 11.9%, and
8.0% for public companies including active mining
operations. The lower corporate income tax rates is
for the first $500,000 of income of small Canadian
owned private corporations. All other corporate
income is taxed at the higher rate. Taxable income is
defined as federal taxable income with the following
exceptions:
1) Mining companies may deduct 100% of their
cumulative Canadian development expenses in the
year in which production commences.
2) Exploration companies can sell 25% of their
exploration and development costs as "flow
through shares". The purchaser is allowed a tax
deduction of 150% of the exploration expenses
purchased.
In 2004, this benefit was extended indefinitely.
Should a mining company sustain an operating loss in
a given year, the corporate tax to be paid may be
reduced by 5.75% of the loss but not to exceed three
times the capital tax payable (see Capital Tax Section).
Any credit available can be carried forward up to 7
years.
Firms investing $300 million in new projects which
generate annual payroll of $4 million in the province
are eligible for a ten year tax holiday during which all
income and capital taxes are forgiven.
Smaller firms may also be eligible for income tax
relief on the first $200,000 annually for five years
after operations commence.
Capital Tax
In 2010, taxable paid-up capital is taxed at the rate of
0.12% ($250 per year prior to production). This was
reduced to 0% on January 1, 2011.
Provincial Mining Tax
Net mining income is taxed at the rate of 12%, which
can be reduced to as low as 2.1% as described below,
if allowable credits can be utilized. Net mining
income is defined as gross product and revenue less
operating costs, up to 100% depreciation and
amortization expenditures, and 100% amortization for
onsite exploration costs. Acquisition, financing costs,
hedging gains or losses, and corporate headquarter
TA-Canada
16 COAL COST GUIDE
expenses may not be deducted. The mining tax may be
reduced by as much as 50% with a credit equal to
150% of in-province exploration expense from other
non-producing properties. In central and northern
Québec, this credit is increased to 175% of exploration
expenditures. The remaining 50% payable may be
reduced by up to an additional 65%, with an allowance
equal to 8% of processing asset costs and 15% of
smelting or refining costs.
A further tax credit of 15% of the cost of tailings
treatment facilities is also allowed under this act.
Again the total deduction is not to exceed 65% of the
profit calculated before the deductions.
In contrast to most mining tax regimes, any
operating loss entitles the firm to a refund equal to
12% of the lesser of the loss less the processing
allowance, or the total exploration and development
costs for the year. This is increased to 15% if the mine
is north of 55° latitude.
If the mine is north of 55° latitude, it is also eligible
for the Northern Mine Allowance. This is a deduction
equal to the lesser of the annual profit from the mine
or 166b% of the onsite processing costs not
previously deducted for this purpose. This deduction
may be taken only in the first ten years of the mine
operation.
Provincial Sales Tax
On January 1, 2011, the rate of the Québec sales tax
rose from 7.5% to 8.5%. Purchases of goods and
services are subject to a 8.5% sales tax. The basis is
the purchase price plus the federal goods and services
tax (GST) which was reduced on January 1, 2008 from
6% to 5%. Therefore, the combined federal and
provincial tax is 13.5%. The Québec sales tax is
harmonized with the GST.
Property Tax
All real property, including land, buildings and
improvements are assessed at the municipal level.
Buildings and improvements are assessed at
replacement value. Mineral reserves, roads, and
personal property are not assessed or taxed at this level
The province is divided into 101 regions containing
1,104 separate taxing municipalities.
A list of 2010 rates for selected municipalities are
listed below.
Municipalities Tax Rate ($/$100 valuation)
Abitibi $1.9206 Laval $1.2844
Atibiti Ouest 1.1826 Richelieu 1.4531
Acton 1.6345 Montcalm 0.5270
Bonaventure 1.9489 Port -Cartier 2.0015
Deux-Montagnes 1.3492 Portneuf 0.9374
Kamouraska 1.1393 Rouyn Noranda 1.4150
Copyright © 2011 InfoMine USA, Inc.
SASKATCHEWAN
Changes: None.
Corporate Income Tax
Saskatchewan’s corporate tax is levied as a percentage
of the share of a corporation’s federally defined
taxable income that is allocated to the Province.
Saskatchewan’s general tax rate on corporate taxable
income was reduced from 14% to 13% effective July
1, 2007, and was further reduced to 12% effective
July 1, 2008. Saskatchewan small businesses, defined
as Canadian-controlled private corporations, pay a
reduced rate of 4.5% (commonly known as the small-
business rate) on eligible business income. The
eligible income threshold for the small business rate
was increased from $450,000 to $500,000 effective
January 1, 2008.
Saskatchewan has also provided resource
companies with compensation in lieu of full federal
deductibility of provincial royalties and production
taxes under the Saskatchewan Royalty Tax Rebate
Program. With the federal re-introduction of full
deductibility as of January 1, 2007, the Saskatchewan
Royalty Rebate Program is no longer necessary. The
carry-forward period for any outstanding
Saskatchewan Royalty Rebate balances will be limited
to seven years.
Capital Tax
Saskatchewan resource producers are subject to a
capital tax and a capital tax surcharge.
Capital Tax
Corporate Capital Tax for mining companies was
eliminated on July 1, 2008.
Capital Tax Surcharge
Resource producers are subject to a capital tax
surcharge equal to the difference between 3.6% of the
corporation's value of Saskatchewan resource sales and
the existing capital tax liability. This tax applies only
to natural gas, oil, potash, coal, and uranium
producers. If sales are less than $100 million the
producer can deduct $2.5 million from sales before
determining the capital surcharge due.
The capital tax charged to qualifying potash,
uranium, coal, oil and natural gas producers was
reduced from 3.6% of value of Saskatchewan resource
sales to 3.0% on July 1, 2008.
If sales in a given year are less than $100 million
the producer can deduct $2.5 million from sales before
determining the capital surcharge due.
Copyright © 2011 InfoMine USA, Inc. COAL COST GUIDE
Coal Crown Royalty and Freehold Production Tax
Depending upon the type of mineral rights owned,
either a Crown Royalty or a Freehold Production tax
on the mine mouth value of coal production is due to
the provincial government annually.
The mine mouth value is the gross value of the coal
less the handling and transportation costs necessary to
reach market. The crown royalty rate is 15% of mine
mouth value; the freehold production tax is 7%.
In both instances, a resource credit equal to 1% of
the coal gross value, before deduction of handling and
transportation costs can be applied. The credit is used
to reduce the royalty or tax obligation.
Provincial Sales Tax
The PST in Saskatchewan was reduced from 7% to
5% in 2005. In Saskatchewan, the tax basis does not
include the federal GST of 8% and is applied to the
original purchase price.
Property Tax
In Saskatchewan, property values are updated every
four years. The Saskatchewan Assessment
Management Agency (SAMA) conducts a full
revaluation of all properties in the province to
co-ordinate with a new base date.
The current revaluation in Saskatchewan,
completed in 2009, will using June 30, 2006 as the
base date.
The 2009 property assessment system will move to
a more flexible, results-focused market value
assessment system which is essentially the same in all
other Canadian provinces.
Three generally accepted appraisal techniques used
to value property in a market value assessment system
include the cost approach, the sales comparison
approach and the property income (rental) approach.
Of these, the only method currently allowed in
Saskatchewan for valuing commercial properties is the
cost approach which will continue to be used in
smaller municipalities and for specific property types.
In some selected areas and specific property types with
active local sales markets the sales comparison
approach may be used. The fair market value of land,
buildings and improvements, and mobile mining
equipment is subject to property tax.
The actual millage rate varies dramatically in the
province. Currently the average rate is $25-30/$1,000
valuation. The assessment ratio is 100% for mining
lands and related improvements.
Fair market value is defined by formula. Land
TA-Canada
17
values to be added to the assessment base are valued as
"High Use" - $20,000/ac (examples - active mining
areas or processing sites), "Medium Use"- $4,500/ac.
(examples - secondary operations such as pipelines,
conveyors, water pumping stations), "Low Use"
$600/ac. (examples - storage areas, disposal areas, and
unmined or agricultural lands).
Improvements include buildings and "resource
production equipment". Manufacturing and processing
equipment are not included in the tax base.
To determine the assessed value for taxable buildings
and equipment, the base year market value is reduced
by a constant value, 40% in most instances. An
adjustment to the base is also allowed in proportion to
the annual downtime, where downtime is defined as all
days where the equipment is not available for a period
exceeding seven workdays.

YUKON TERRITORY

Changes: New property tax rate; new lower income Following are Tax rates for the eight principal
tax threshold. municipalities and for rural Yukon .

Corporate Income Tax 2010 Tax Rate

Municipality/Region (% of assessed value)
Yukon Territory taxable income is subject to tax at a
rate of 2.5%, 4% or 15%. Taxable income is defined Beaver Creek, Carcross, Ross River 0.870
( non-residential)
as federal taxable income. The lowest rate applies to
manufacturing and processing income. The 4% rate Burwash Landing, Destruction Bay, Old Crow 0.760
& Pelly Crossing (non-residential)
applies to the first $400,000 of taxable income for the
operations of Canadian controlled private corporations Carmacks (all properties) 1.350
(CCPC). Effective January 1, 2011, the Yukon Faro (non-residential) 1.380
business limit to which the lower income tax rate
applies is increased to $500,000. All additional Dawson (non-residential 1.700
income from CCPC and all income of other Haines Junction (non-residential) 1.300
corporations is taxed at the highest rate. The Yukon
Mayo (all properties) 1.460
Mineral Exploration Tax Credit expired April 1, 2007.
1
Rural Yukon (non residential) 0.670
Capital Tax Teslin (commercial) 1.230
Yukon Territory has no capital tax.
Teslin Area (non-residential) 1.270
Mining Royalty Watson Lake (non-residential) 1.681
Royalties under the Quartz Mining Act of 2003 does
Whitehorse (non-residential) 1.619
not apply to coal.
Whitehorse Periphery (non-residential) 0.670
Provincial Sales Tax 1
All areas outside of the specific locations above.
Yukon Territory has no sales tax.

Property Tax
The current market value of land and the Whitehorse
replacement value of improvements (less declining
balance depreciation) are subject to taxation.

TA-Canada
18 COAL COST GUIDE Copyright © 2011 InfoMine USA, Inc.