Fiscal Incentives

Updating Canadian Exploration Expenses

PDAC secured a significant victory in the 2016 federal budget when the Government of Canada accepted its request to include certain expenditures related to Aboriginal engagement and environmental studies as eligible for classification as CEE.

Prior to PDAC advocacy, certain exploration costs associated with community consultation and environmental studies were classified as Canadian Development Expenses (CDE) instead of Canadian Exploration Expenses (CEE). As most flow-through financing is raised to cover costs that are classified as CEE (over 90%, according to a 2014 PDAC study), this meant that most companies raising flow-through funds could not finance these costs using the funds raised. During the current financing downturn, this led many projects to be delayed until hard dollars could be raised to cover costs that are increasingly crucial to achieving both legal and social licenses.

Since 2012, PDAC has been advocating for legislative changes to address this restriction, securing an initial victory in Budget 2015 when the federal government (under then Prime Minister Harper) agreed to implement our proposal. After four years of research, member consultation and advocacy, PDAC achieved a significant win for the mineral exploration industry in 2016 when the government under Prime Minister Justin Trudeau also passed legislation making the changes we have proposed.

These changes will allow companies exploring in Canada to use flow-through funds to finance those activities, which support responsible exploration. The advocacy work by PDAC was done in partnership with several regional mineral industry associations, particularly the Association for Mineral Exploration in BC and the Association for Mineral Exploration in Quebec.