Special Advisory to Issuers Regarding the Critical Mineral Exploration Tax Credit

As most readers will know, a new 30% Critical Mineral Exploration Tax Credit (CMETC) was announced in the Canadian Federal budget on April 7th of this year. Companies that issued flow-through shares in 2022 to fund exploration for specified critical minerals to subscribers expecting to be able to claim the CMETC are generally required to file a T101A tax form with Canada Revenue Agency (CRA) by the end of January to renounce eligible resource expenditures qualifying for an investment tax credit. (Note, however, that the T101 tax slips that are required to be sent to the flow-through share subscribers by issuers are not due until a couple months later). At this time, CRA has not yet published revised forms on which the issuer can designate that the expenses being renounced are eligible for the CMETC.

Our contacts at CRA have advised that they expect to publish the new forms sometime in January of 2023. As such, it is prudent to hold off on the T101A filing and delivery of subscriber tax slips until that time. Given that there may be very little time between publication and the due date for the T110As, we recommend that issuers prepare so they will be in a position to file the new forms by the end of January. If you are concerned that you will be unable to complete the filing by the deadline, we suggest that you speak to your tax advisor as to the best approach to take as we get closer to the end of January. While there is a late filing penalty equal to ¼ of 1% of the proceeds of the flow-through offering to a maximum of $15,000, we believe that where an issuer has acted reasonably, a penalty waiver may be available under the circumstances if the filing is late. You are encouraged to discuss with CRA or your tax advisor.

The required Quebec renunciation filings and Releve 11 forms are unaffected. Also, note that the initial Federal T100A and T100B filings can be submitted without delay. In the event that you have not yet filed the T100A, please note that CRA just published the form of CMETC certificate to be included with the T100A filing which can be accessed here.