Woman making a frame around the sun with her hands at sunrise
Woman making a frame around the sun with her hands at sunrise
Woman making a frame around the sun with her hands at sunrise

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

Related Publications (5 Posts)

Featured Insight

The Canadian Capital Market is Psyched: An Update on the Growing Wave in the Psychedelics Industry

This bulletin provides an overview of the regulations surrounding psychedelics in Canada and psychedelics companies in the Canadian capital markets.

Read More
May 12, 2021
Featured Insight

Stopping a Slippery Slope: Ontario Divisional Court Clarifies that Auto Insurance Coverage Applies Only to Direct Causes of Injuries

Ontario Divisional Court clarifies that automobile insurance only applies to direct causes of injury under the Statutory Accidents Benefits Schedule.

Read More
May 12, 2021
Featured Insight

What Are You Suing Me For? I Had No Control: Lessor Fleet Liability

The decision in Barz concerns the interplay between Alberta’s Workers’ Compensation Act and Traffic Safety Act.

Read More
May 12, 2021
Featured Insight

Paid COVID-19 Sick Leave for British Columbia Employees

The British Columbia government has announced proposed amendments to the Employment Standards Act to provide for paid sick leave.

Read More
May 12, 2021
Featured Insight

A “vaccine break” for COVID-19 vaccination

Quebec follows the lead of the common law provinces taking legislative action to encourage vaccination.

Read More
May 12, 2021