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Ontario Government Harmonizes the Ontario Focused Flow-Through Share Tax Credit with the Critical Mineral Exploration Tax Credit

Last week the Ontario government released their Fall Economic Statement titled “Building a Strong Ontario Together”. PearTree was pleased to see that our advocacy efforts to harmonize the Ontario Focused Flow-Through Share Tax Credit with the federal Critical Mineral Exploration Tax Credit (CMETC) were successful.

The government’s proposal is to expand eligibility of the Ontario Focused Flow-Through Share Tax Credit to include specified critical mineral exploration expenditures that are eligible for the federal CMETC and renounced on or after January 1, 2023.

When the Federal Government introduced the Critical Mineral Exploration Tax Credit in April of 2022, it unleashed $500 million of private sector investment into the critical minerals sector in the first 18 months. This was transformational for the sector and has resulted in thousands of jobs being created in rural and remote communities across Canada. With Ontario making this change to the Ontario Focused Flow-Through Share Tax Credit, all provinces with a top-up to the flow-through regime have now harmonized with the CMETC, allowing for critical mineral deals to benefit from generous federal and provincial tax treatment. This will maintain investor confidence and provide certainty to the people funding the early stages of critical mineral exploration and development.

For issuers who have completed charitable flow-through financings this year, a friendly reminder that the federal T101 forms have been updated to permit issuers conducting exploration in Ontario targeting critical minerals to claim the Ontario Focused Flow-Through Share Tax Credit. These updated T101’s should be used as you complete your year end paperwork.

The Fall Economic Statement also highlights investments made through the Critical Minerals Innovation Fund (CMIF) which launched in November 2022. In 2023-24 the CMIF funded 13 projects including projects to help develop lithium processing techniques, bioleaching techniques to reprocess tailings to extract critical minerals, and to commercialize a continuous drilling system for deep exploration, all with a focus on battery metals.

In addition, highlights were also provided on how the additional $6 million investment over two years in the Ontario Junior Exploration Program (OJEP) was allocated. Activities benefiting from this program included: diamond drilling, line cutting, ground geophysical, geological and geochemical surveys and rock stripping activities.

The Fall Economic Statement is expected to pass into law before the Legislative Assembly of Ontario rises for the winter break on December 14th.

Alanna can be contacted at alanna.clark@peartreecanada.com, and welcomes your questions and comments on this piece.

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