MAC seeks tax deductions for mine reclamation contributions

The tax treatment of reclamation expenditures was the focus of mining industry addresses to the federal government in this year’s pre- budget consultations in Ottawa. In a submission to Finance Minister Michael Wilson and the minister of state for privatization and regulatory affairs, John McDermid, the Mining Association of Canada (MAC) urged allowing full deductibility for income tax purposes of expenditures paid into a government-mandated mine reclamation fund.

This same measure was submitted by a mining industry group to the conference of federal and provincial mines ministers in Winnipeg, Man., earlier this year.

MAC argues that tax treatment would be more equitable and would strengthen industry support for mine reclamation funding in the various provinces and territories.

Adopting this measure, MAC says, would also promote good environmental management. It is argued that mine reclamation funding arrangements will increase the likelihood that a mining company will be in a position at the time of decommissioning to discharge its reclamation responsibilities, which should result in fewer abandoned mine sites.

And, MAC says deductibility may enhance the likelihood that a mining company, in considering development of a lower quality resource, will be assured it can meet the costs and responsibilities of reclamation. As government-mandated requirements for reclamation increase, deductibility would be conducive to maintaining the level of economic activity, the lobby group says.