Royalties

The following is a general summary on mineral royalties in the Yukon. Please refer to the Quartz Mining Act and Placer Mining Act for legal wording.

 

 

 

• Yukon Gold Royalty
• Yukon Mining Royalty
• Allowable Deductions
• Deductions not permitted
• Payment of Royalty
• Royalties Returns
• Books & Records
• Enforcement
• Administration

Yukon Gold Royalty

Under the Placer Mining Act, the Yukon levies a royalty on all gold shipped from the Yukon for export, whether in the form of gold dust as mined or bars. The royalty is computed at the rate of 2.5% of the value of the gold, or at such lesser rate as may be fixed by the Commissioner-in-Council. For this purpose, gold is valued at US$15 per ounce.

Yukon Mining Royalty

The Quartz Mining Act states that annual royalties are payable to the Government of Yukon on a mine located in the Yukon if the value of the mine for a calendar year exceeds $10,000. Annual profit is defined as the gross receipts from the year's output of the mine less the expenses, payments, allowances or deductions described below. Royalty rates imposed are as follows:

1. Upon annual profit in excess of $10,000 and up to $1,000,000 3%
2. On the excess above $1,000,000 and up to $5,000,000 5%
3. On the excess above $5,000,000 and up to $10,000,000 6%
4. On the excess above $10 million, a proportionate increase of 1 percent no max. for each additional $5 million.

Mines with an annual profit of less than $10,000 are not required to pay an annual royalty.

Allowable Deductions

The following deductions, and not others, are allowable under the Act:

• Transportation Costs
• The actual cost of transportation output sold, if paid or borne by the mine operator.

Operating Expenses

The following operating costs are allowable deductions:

• actual working expenses of the mine, both underground and above ground;
• salaries and wages in respect of personnel employed at the mine site, incurred in connection with the operation of the mine;
• cost of supplying power to the mine or in the handling of ore;
• cost of supplies used in mining operations; and
• costs incurred in safeguarding the mine and its products incurred by the mine operator, and the cost of insuring the output and the mining machinery and equipment used in connection with mining operations, including the storage of ore.

Depreciation

An allowance for annual depreciation of the plant, machinery, equipment, and building of the mine. Such allowance is to be based upon the probable annual average cost of repairs and renewals necessary to maintain the assets in an efficient condition. The allowance may not exceed 15 per cent of the value of such assets at the commencement of the year. For this purpose, the value thereof is to be appraised by an officer named by the Minister.

Exploration and Development Expenses

Expenses incurred in sinking new shafts, making new openings, workings or excavations and stripping, trenching or drilling in respect of the property on which the mine is situated are allowable deductions. Any such expenses incurred in respect of any other land in the Yukon Territory belonging to the mine operator are also deductible. In addition, the cost of any work that, in the opinion of the Minister, has its objective as the opening of mines or the testing for minerals is allowed as a deduction.

If exploration and pre-production costs are not deducted against the income of another mine of the operator in the Yukon in the year incurred, they cannot be deducted in a later year against the income of the mine.

Taxes Payable

All taxes payable upon the profits of the mine or mining work, or upon the profits made from smelting or refining or otherwise treating any of the products of the mine are allowed as a deduction.

Deductions Not Permitted

No deduction is permitted for interest expense or for depletion in the value of the mineral property by reason of exhaustion of the ore. Royalties paid for the care of the mine and head office expenses not specifically deductible are not allowed. A processing allowance is also not allowed.

Payment of Royalty

The annual royalty payable in respect of a particular year is to be paid on the first day of October of the following year.

Royalty Returns

A royalty statement is to be furnished to the Minister on or before the first day of April in respect of the year ending on December 31 of the preceding year.

Books and Records

Persons liable to pay the annual royalty are required to keep certain books and records at or near the mine site, showing all facts and circumstance necessary for the purpose of ascertaining the amount of the annual royalty payable. The Minister may determine the number and character of books to be kept.

In addition to having access to the mine site and property, the Minister has full and complete access to all books and records that may be required for purposed of ascertaining the amount of the annual royalty payable.

A penalty of 10 per cent of the annual royalty is imposed if the annual royalty is not paid by October 1. Such penalty becomes part of the royalty due and payable and an additional 10 percent penalty is added at the expiration of each year thereafter that the royalty remains unpaid.

Penalties are also imposed on persons making false statements.

Persons neglecting to conform with the requirements of the Act may incur a penalty and, in addition, are liable to pay a royalty of double the amount otherwise payable.

All amounts payable under the Act become a lien on the mine or the mining property and the Minister may recover royalties through the appointment of a receiver or through distress sale.

Administration

The Act is administered by the Minister of Energy, Mines and Resources. Mine operators are required to notify the department within 10 days after the commencement of active mining operations and to notify Energy, Mines and Resources of any change in the ownership of the mine and of every discontinuance of active operations or of every resumption thereof after discontinuance.

 

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