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Yukon Mineral Exploration Tax Credit
Who is eligible? Individuals must be resident in the Yukon on the last day of the taxation year for which the credit is being claimed to be eligible to apply for the YMETC. Corporations must have maintained a permanent establishment in the Yukon at any time during the taxation year for which the credit is being claimed in order to be eligible to apply for the YMETC. Corporations exempt from tax payable under section 17 of the Yukon Income Tax Act or that are controlled by one or more persons who are exempt from tax payable under section 17 of the Yukon Income Tax Act are not eligible to apply for the YMETC.
What mineral exploration expenditures are eligible? Eligible mineral exploration expenses are expenses incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of a mineral resource in the Yukon. Eligible mineral exploration expenses will include expenses incurred in the course of:
Claims for the YMETC will be reduced by any government assistance such as grants, subsidies, rebates and forgivable loans in respect of the same exploration expenses.
What expenditures are ineligible? The YMETC is targeted at individuals and corporations who undertake to determine the existence, location, extent or quality of a mineral resource in the Yukon. Expenses not eligible for the YMETC include but are not limited to:
Location of expenditures Exploration expenses must be made in relation to projects located within the Yukon to be eligible for the YMETC.
Federal "flow-through share" provision: Eligible corporations who finance exploration activity with flow-through shares may claim the YMETC for eligible expenses, even if those expenses are flowed through to investors. The investors who claim renounced expenditures in respect of those flow-through shares are not eligible for the YMETC. The YMETC will be considered to be "assistance" under the federal definition of Canadian Exploration Expense.
Corporations and the permanent establishment requirement Corporations must be subject to Yukon income tax for the taxation year in which the YMETC is claimed. This requires that a corporation maintained a permanent establishment in the Yukon at some time during the taxation year to be eligible to apply for the YMETC. Further information regarding the definition of permanent establishment may be found in Interpretation Bulletin IT-177R2 (
Claiming the credit Eligible taxpayers may claim the credit by completing a prescribed form and filing it with their T-1 Individual or T-2 Corporate Income Tax Return. The forms (Yukon Mineral Exploration Tax Credit) are available at Canada Customs and Revenue Agency offices or online at http://www.ccra-adrc.gc.ca/menu/EmenuLEC.html. The YMETC must be claimed within 12 months after the end of the year for which the credit is claimed. The YMETC is refundable to the extent it exceeds a taxpayer's income tax payable. The credit will be first applied against tax payable to Yukon and then against tax payable to Canada. Refunds will be made in the form of a cheque and will be paid upon assessment of the taxpayer's income tax return.
Review of the Tax Credit The Yukon Mineral Exploration Tax Credit was introduced in 1999 to stimulate exploration during the last mining downturn. The Yukon government committed to examine the YMETC if market conditions improved and exploration spending exceeded $30 million. Now that this threshold has been reached and exploration spending for 2005 is anticipate to be in the $50 million range, the Yukon government has begun a full assessment of the program. Generally, Yukon’s overall tax regime is competitive with the rest of the country. However, with a number of mineral projects moving from exploration to production and development, the Yukon government is looking at new options for mining tax policies and incentives to support mining at those stages.
For more information contact: Department of Finance, Revenue Services
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Last Updated 19-06-2006