Federal Budget 2021 – Impacts on Mining and Flow-Through Share Donations

On Monday, April 19th the Federal Government announced the 2021 Budget. None of the proposals in the budget impact PearTree’s flow-through donation format. With the budget announcement we are optimistic about the decisions made that reflect the Canadian Government’s understanding of the importance and potential of Canada’s mineral sector and its place in the mineral exploration and development space globally.

The time lines for flow-through share funds raised in 2019 and 2020 will be extended as previously announced in 2020, lessening the impact of the COVID-19 pandemic on exploration companies in the sector.

Other highlights from Budget 2021 include commitments to a Net Zero Accelerator, enhancing Canada’s supply of critical minerals & incentivising sustainable zero emission technology manufacturing.

Budget 2021 proposes to provide $5 billion over 7 years starting in 2021, to the Net Zero Accelerator. This funding would allow the government to provide up to $8 billion of support for projects that will help reduce domestic greenhouse gas emissions across the Canadian economy.

Some examples of zero-emission technology manufacturing in Canada include:

  • Geothermal energy systems
  • Electric cars, busses, trucks, and other vehicles
  • Batteries and fuel cells for electric vehicles
  • Electric vehicle charging systems

Source:  Budget.gc.ca

Enhancing Canada’s Supply of Critical Minerals

Canada has rich reserves of the critical minerals needed for electric vehicle batteries and other products required to reach net-zero. Exploration and development of the resources needed to produce goods that do not increase greenhouse gas emissions, creates important jobs across the country. The resource sector is also the largest employer in remote and indigenous communities.

  • Budget 2021 proposes to provide $9.6 million over three years, starting in 2021-22, to create a Critical Battery Minerals Centre of Excellence at Natural Resources Canada. The centre would coordinate federal policy and programs on critical minerals, and work with provincial, territorial, and other partners. The centre would also help implement the Canada-U.S. Joint Action Plan.
  • Budget 2021 proposes to provide $36.8 million over three years, starting in 2021-22, to Natural Resources Canada, for federal research and development to advance critical battery mineral processing and refining expertise.

Source:  Budget.gc.ca

Impact on PearTree Donors

PearTree’s innovative approach to financing in the resource sector has resulted in our participation in a greater number of financings on better terms than we have seen at any time during the past three years. Support for critical mineral exploration and development in Canada together with additional monetary stimulus to reignite the economy as we leave the COVID 19 pandemic behind, are important drivers of continued momentum for capital raising in this sector. While this creates more opportunities for charitable donors to support the causes that matter most to them on the most tax efficient basis possible, the prevailing sentiment suggests that taxes will go up following a fall election or otherwise. On the heels of a benign federal budget, banking tax deductions and credits now while the commodities markets remain cooperative may be the best strategy for increasing charitable giving or more generally as part of one’s tax planning.

For more information on Budget 2021 and how it might affect you, feel free to reach out to any member of our team 

Legal Disclaimer

This report / article has been prepared for general information purposes only. Any opinions herein reflect the views of the Analyst and/or Author as at the date appearing above, and does not constitute a recommendation or individual investment advice, nor should it be considered a solicitation for the purchase or an offer of securities. Information contained in this report is derived from sources believed to be reliable, but its accuracy cannot be guaranteed. The information provided herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country including the United States, where such distribution or use would be contrary to law or regulation or which would subject PearTree to any registration requirement within such jurisdiction or country.