Intelligent Taxation Aids Canada's Mineral Development

FOR twelve successive years Canada's mineral production has shown a steady increase, rising from a value of $0.5 billion in 1945 to $2.06 billion in 1956, and the outlook for the future is one of continued growth. A great deal of credit for this growth must go to Canada's tax policies, which recognize that mines are difficult and costly to find, and that once found, they are a wasting asset. These tax policies take form under the Income Tax Act, which provides a tax- free period of three years on initial production for new mines and, after that period is over, allows all proper expenses of operation to be deducted from mine revenue. These allowable expenses include write-off of plant and pre-production development expenditures. From the resulting profit figure after this procedure, a further deduction of one-third is allowed for depletion before net taxable income is arrived at. Tax rates of 20 pct on the first $20,000 and 47 pct on the excess are then applicable to the net taxable income.