Insights Header image
Insights Header image
Insights Header image

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)View More

Featured Insight

Do You See What I See? Fake AI Cases Can Result in Real Contempt

Reliance on an AI hallucinated case in submissions to the court can constitute a breach of professional obligations and may amount to contempt.

Read More
May 11, 2025
Featured Insight

Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act: Where to next for companies?

Join subject matter experts from McMillan and Pillar Two for a webinar to support companies in addressing their forced labour, child labour and other modern slavery risks, and to support their reporting obligations under the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act.

Details
Tuesday, May 20, 2025
Featured Insight

Why Extended Producer Responsibility and the Circular Economy Demand Boardroom Action

Discussion of global amendments to Extended Producer Responsibility (EPR) and right to repair laws, impacting product lifecycle management and regulatory compliance for businesses.

Read More
May 6, 2025
Featured Insight

Québec’s Bill 96: Where we are now after four years and the road ahead

Join Enda Wong, Business Law, Shari Munk-Manel, Employment & Labour Relations, and Émile Catimel-Marchand, Financial Services and Regulatory as they discuss Bill 96, its impacts on the day-to-day operations of companies doing business in Québec, including in the areas of employment, contracting, product design, labelling and advertising.

May 5, 2025
Featured Insight

Put Your Best Foot Forward: New Evidence Requirements for Trademark Appeals

Discussion of amendments to Canada's Trademarks Act impacting timing of delivery of evidence to the Trademark Opposition Board or later to the Federal Courts.

Read More
Apr 30, 2025