Tax breaks could spur $1.6B more in exploration: AME

Expanding Canada’s mining tax incentives could attract up to $1.6 billion (US$1.1 billion) in additional annual exploration spending, accounting firm EY estimated in an analysis commissioned by the B.C.-based Association for Mineral Exploration (AME).

Including feasibility work in eligible exploration expenses and extending tax credits could help advance three to five additional mines under favourable market and policy conditions, according to EY’s economic assessment.

“Canada has what the world needs, and we have the opportunity to secure the mineral supply chain, strengthen Canada’s military capacity and ensure Canada’s long-term national and industrial sovereignty,” AME president and CEO Todd Stone said in an Oct. 7 statement.

The association wants engineering, feasibility and technical costs included under Canadian exploration expenses, a category of deductions companies can transfer to investors through flow-through shares. The push targets a financing gap between discovering a deposit and establishing whether it can support a mine.

Budget hurdle

The Liberal Party’s election platform pledged to expand eligible exploration activities. But Budget 2025 proposed explicitly excluding expenses incurred to determine a mineral resource’s economic viability or engineering feasibility from Canadian exploration expenses.

That proposal followed a British Columbia Supreme Court decision allowing a broader interpretation of the provincial equivalent of the deduction. Technical studies have generally been excluded under the Canada Revenue Agency’s interpretation of the federal rules, according to the budget documents.

AME is seeking broader eligibility in Budget 2026, building on its earlier appeal to Finance Minister François-Philippe Champagne.

Budget 2025 separately proposed adding 12 minerals to the 30% Critical Mineral Exploration Tax Credit. That incentive is distinct from the 15% Mineral Exploration Tax Credit.

Conditional gains

The upper estimates assume tax changes alongside strong commodity prices, better permitting, infrastructure investment and improved access to capital. They aren’t guaranteed outcomes from expanding expense eligibility alone.

Higher exploration spending could add $5.2 billion to $12.2 billion to gross domestic product over 2026–2035, EY estimated. The associated employment benefit is 14,000 to 34,000 years of full-time employment over that decade, rather than that many permanent jobs.

Three to five additional mines could contribute another $12.9 billion to $21.4 billion to GDP over construction and 15 to 20 years of operations. AME’s headline figure of up to $33 billion therefore combines benefits over different periods.

Expanded incentives could cost $6.6 billion in forgone tax revenue over 10 years, EY estimated. Its five-to-one comparison measures GDP generated against that fiscal cost, rather than money returned to government.

British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia and Yukon support expanding eligible expenses, AME said.

“Right now, there is not a single public policy that the premiers are more united on that would have such a significant impact on investment here in Canada,” Stone said.