Tax change affects diamond exploration

The minister of Energy, Mines and Resources Canada (EMR) and the finance minister are retroactively altering the income tax rules relating to diamond exploration. Effective Jan. 1, 1993, all diamond deposits are included in the definition “mineral resource” and all companies exploring for diamonds are to be treated equally under income tax legislation.

Existing tax legislation defines a mineral resource as including, among other things, a deposit from which the principal mineral to be extracted is certified by EMR as an industrial mineral contained in a non-bedded deposit. Exploration expenses incurred in the search for such a mineral resource qualify for Canadian Exploration Expense (CEE) and for flow-through. — Robert Parsons is chairman of the PDAC’s finance and taxation committee and a partner with Price Waterhouse in Toronto.