Digital Brain
digital brain
digital brain

Are Changes to the Flow-Through Share Regime Around the Corner?

December 2015 Tax Bulletin < 1 read

Prime Minister Justin Trudeau recently delivered a “Mandate Letter” to the new Minister of Finance, Bill Morneau, that summarized the Prime Minister’s policy goals and included a lengthy listing of priorities to be pursued by the Finance Minister.

Of notable interest to those that operate in the Canadian natural resources sector, the Prime Minister’s list of priorities included the following statement:

Develop proposals to allow a Canadian Exploration Expenses tax deduction only in cases of unsuccessful exploration and re-direct any savings to investments in new and clean technologies.

The Prime Minister’s statement appears to be related to the pledge made by the new Government during the recent federal election campaign to “phase out subsidies for the fossil fuel industry” by limiting Canadian Exploration Expense tax deductions to the deduction of expenses incurred in the course of “unsuccessful exploration”.

While it has been speculated that the contemplated restrictions will focus only on oil and gas exploration, no details have been released on how the ability to claim Canadian Exploration Expenses may be limited. Of particular significance, it is unclear how any future-oriented limitations may be reconciled with the provisions of the Income Tax Act that permit the current renunciation of Canadian Exploration Expenses to qualifying subscribers of flow-through shares.

Members of the natural resources sector, particularly those actively involved in oil and gas exploration activities, would be well advised to closely monitor the development of this new governmental policy and any resulting legislative proposals.

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2015

Insights (5 Posts)

Featured Insight

Part 1 | Capital Markets Podcast: The Clash Between Securities Law and Crypto

This podcast series dives into the future of crypto law.

Read More
Nov 24, 2022
Featured Insight

Update for Federal Employers: Changes to the Canada Labour Code and Regulations

Federal employers should prepare for the forthcoming approval and implementation of several regulations proposed under the Canada Labour Code.

Read More
Nov 24, 2022
Featured Insight

Bill 23 Update: Revisions Proposed to Bill 23 Following Lengthy Second Reading

Ontario's most talked about piece of legislation, Bill 23, received some revisions from the Standing Committee prior to Third Reading.

Read More
Nov 24, 2022
Featured Insight

McMillan’s Annual Privacy, Data Protection and Cybersecurity Client Seminar

Join McMillan's Privacy & Data Protection Group on Wednesday, December 7th for an overview of recent significant legal developments, tips on complying with new and forthcoming obligations under Quebec’s Bill 64, and discussions about hot topics in data management.

Details
Wednesday, December 7, 2022
Featured Insight

OSC Signals Concerns about Gamification of Investing

The OSC cautions trading platforms about the use of gamification to incentivize investment after an experimental study shows these techniques are effective.

Read More
Nov 21, 2022