Canadian Exploration Incentive Program

"The Canadian Exploration Incentive Program (CEIP), which was announced by the federal government on May 3, 1988, promises to maintain the viability of flow-through shares as a financing mechanism which has proven to be so crucial to the health of the junior exploration sector. This month, Tax Notes examines, the main features of CEIP, which will come into play on January J, 1989. IntroductionOn May 3,1988, the Honourable Marcel Masse, Minister of Energy Mines & Resources, and the Honourable Gerald Merrithew, Minister of State (Forestry and Mines) announced the Canadian Exploration Incentive Program (CEIP). Under CEIP, the federal government will make cash payments to eligible applicants equal to 30% of eligible exploration expenses. CEIP payments will be available with respect to both mineral, and oil and gas, exploration. In essence, the program will replace the ""mining exploration depletion allowance"" (MEDA) presently applicable to mineral exploration, and the Canadian Exploration and Development Incentive Program (CEDIP) which is presently available to the oil and gas exploration sector.This paper discusses briefly the main features of CEIP insofar as the program will affect mineral exploration. The comments herein are based on the Canadian Exploration Incentive Program Act which received Royal Assent on July 21, 1988, and on a discussion paper which was released by EM&R in May 1988. The bulk of the rules relating to the program will be in the form of regulations which have yet to be finalized. It is understood that EM&R would like to have the regulations in force by October I, 1988, when the oil and gas portion of CEIP becomes effective. (The rules relating to mineral exploration will become effective January I, 1989)."