For many investors, the tax hike would “significantly reduce” the value of a measure called the Mineral Exploration Tax Credit, or METC, which is designed to help companies raise money to explore for critical minerals like copper, nickel and lithium, according to the Mining Association of Canada.
The exploration tax credit is part of a basket of incentives Canada has introduced to stimulate financing of higher-risk mining projects in the country. Junior miners can raise equity by issuing flow-through shares, which are structured to allow the company to pass on certain expense deductions to investors — allowing those people to immediately reduce their income-tax bills. When the shares are sold, the proceeds are taxed as a capital gain.
Increasing the capital gains rate “effectively negates the tax benefit associated with the METC,” Pierre Gratton, the mining association’s president, said in an interview.
“Our sense is…
