Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the nephrite jade deposits at issue meet the definition of mineral resource as per subparagraph (d)(i) of the definition of this term in ss. 248(1)
Position: No new certification is provided for in-situ deposits on the Property that are covered under a previous mineral resource certification. Other in-situ deposits on the Property qualify as mineral resource. Placer nephrite deposits on the Property do not qualify as mineral resource. Nephrite deposits located in claim areas where in-situ and placer deposits geographically overlap do not qualify as mineral resource.
Reasons: Opinion of NRCan
XXXXXXXXXX 2016-067454
Boriana Christov
June 16, 2017
Dear XXXXXXXXXX:
Re. Mineral Certification – XXXXXXXXXX
We are writing with respect to a request made on behalf of XXXXXXXXXX. (the “Company”) for certification pursuant to subparagraph (d)(i) of the definition “mineral resource” in subsection 248(1) of the Income Tax Act ( the “Act”) with respect to nephrite deposits at the Company’s XXXXXXXXXX (the “Property”).
The Company owns permits to XXXXXXXXXX both mineral and placer claims covering an area of approximately XXXXXXXXXX. The Property is located in XXXXXXXXXX.
The Minister of Natural Resources has advised that the principal mineral, nephrite, to be extracted from the in-situ deposits located on the Property is an industrial mineral contained in non-bedded deposits, excluding:
1. XXXXXXXXXX in-situ deposits, named XXXXXXXXXX found in XXXXXXXXXX part of claim XXXXXXXXXX which are covered under a previous mineral resource certification; and
2. claim areas where the in-situ and placer deposits geographically overlap.
Furthermore, the Minister of Natural Resources has advised that the placer nephrite deposits on the Property fail to meet the definition of an industrial mineral contained in non-bedded deposits.
It is therefore our view that the nephrite in-situ deposits on the Property will qualify as a mineral resource pursuant to subparagraph (d)(i) of the definition of this term in subsection 248(1) of the Act, excluding in-situ deposits, named XXXXXXXXXX and the following claim areas:
1. claim XXXXXXXXXX; and
2. the parts of claim XXXXXXXXXX found within the XXXXXXXXXX.
Moreover, it is our view that the placer nephrite deposits on the Property do not qualify as a mineral resource pursuant to the definition of this term in subsection 248(1) of the Act.
Furthermore, it is our understanding that expenses may be incurred by the Company near existing mines on the Property. In this regard, we note that by virtue of subparagraph (f)(vi) of the definition of “Canadian exploration expense” in subsection 66.1(6) of the Act, any expense that may reasonably be considered to be related to a mine that has come into production in reasonable commercial quantities or to be related to a potential or actual extension of the mine will not qualify as Canadian exploration expense.
Yours truly,
Nicolas Bilodeau
Acting Manager
Resources Section
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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