CRA provides a detailed listing of what is para. (f) CEE

CRA has provided a detailed chart listing various categories of expenditure which generally qualify as Canadian exploration expense (CEE) under para. (f) of the definition as well as noting various exclusions.

In addition to the more obvious early-stage activities, CRA also includes, as qualifying activities, various items that are made with the hope of getting to the bankable feasibility study stage, but without being there yet- such as resource estimation and deposit delineation, deposit modelling and updating resource estimates, testing of rock stability, of mineral resource dilution (re waste rock) and of metallurgy (re difficulty of separating pay material) including grinding tests , metallurgical separation testing on core or bulk samples (to determine recoverable percentage of minerals), but not if for determining an optimal method of separation , and bulk sampling (in reasonable sizes) for determining the effective grade (after dilution), and performing grinding tests and tests as to whether any separation process (e.g. flotation or solvent extraction) allows minimum quality specifications (provided it is not for determining the optimal processing method).

CRA indicates that pre-feasibility and feasibility studies generally do not so qualify, but give rise to deductions under s. 9, and that the costs of various of other types of studies such as those of mine design, evaluation of transportation from the mine to the processing plant and of different technically feasible options for processing, process engineering studies and estimates of capital and operating costs are also deductible under s. 9 if incurred before making a decision to bring the mine into production. This latter point is consistent with Rio Tinto and Bowater.

Neal Armstrong. Summaries of 9 February 2022 Internal T.I. 2020-0873931I7 under s. 66.1(6) – CEE - (f), s. 66.2(5) – CDE - (e) and s. 18(1)(b) – capital expenditure v. expense –current expense v. capital acquisition.