Quebec extends tax incentives for exploration

The Quebec government has decided to extend, for another two years, special flow-through-share tax incentives related to exploration work incurred by mining companies in the province.

Finance Minister Gerard Levesque, in his recent budget, announced that for 1992 and 1993, individuals will continue to benefit from a deduction equal to 133.3% of their investment for underground exploration work and 166.7% for surface work.

Flow-through financing schemes are available elsewhere in Canada on a dollar-for-dollar deduction basis. The special incentives offered in Quebec are a carryover from a few years ago when the additional (above 100%) writeoffs were available nationally.

Junior mining exploration benefited immensely in 1987 and 1988 because of investor interest in the flow-through- financing scheme.

Accounting firm Ernst & Young reported that the Quebec government will introduce a mechanism permitting an investor in flow-through shares or partnership units to obtain a deduction in respect of issue costs incurred by the issuer, within limits.

Levesque is forecasting a provincial deficit for the 1990-91 fiscal year of $2.79 billion and a deficit of $3.48 billion for fiscal 1991-92.

The provincial Liberals also plan to revitalize the Quebec Stock Savings Plan, a tax shelter scheme which was extremely popular in the mid-1980s. The plan was established more than a decade ago to help all types of Quebec-based companies raise funding by going public.

Under the plan, Quebec investors could deduct the value of their investments from their provincial income taxes. The market crash of October, 1987, quickly dulled activity in the plan.