Prospectors welcome adjustments to GST proposal

According to the Technical Paper released Aug 8, a non-producer — such as an individual prospector or a junior exploration company — would have had to pay GST on taxable purchases of goods and services, but would not be in a position to recover any of the GST because the non-producer would have had no sales revenues. The inability of the non-producer to recover such GST would have put prospectors and junior exploration companies in a seriously disadvantaged position, the association says.

The draft legislation released last month corrects this deficiency, by allowing any person engaged in a “commercial activity” to apply to Revenue Canada to be registered for GST purposes. As a registrant, the prospector or junior exploration company would be entitled to apply for a refund of GST paid on purchases of goods and services. The term “commercial activity” is defined in the draft legislation to include “any business” carried on by an individual or a corporation. In the case of an individual, while the activity must be carried on with a reasonable expectation of profit, he would not necessarily be required to be earning profit currently. Accordingly, bona fide prospectors and junior exploration companies should be able to recover GST paid on those purchases relating to their business.

]]>