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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
reprocessing mine tailings qualification for resource allowance
Position TAKEN:
mine tailings are not a mineral resource, however, income from reprocessing tailings may qualify as resource profits
Reasons FOR POSITION TAKEN:
ITA 20(1)(v.1) requires income be in respect of a mineral resource.
Mr. Bill Toms
Chief, Resource Taxation
Tax Policy Branch 5-941462
Business Income Tax Division B. Rankin
Department of Finance
L'Esplanade Laurier
16th Floor, East Tower
Ottawa, Ontario
K4A 0G5
June 8, 1994
Dear Sirs:
Re: Mining Tailings
This is in reply to your request dated June 6, 1994 for information concerning the treatment accorded reprocessing of mine tailings.
The attached correspondence together with the 1972 Tax Review Board decision for Baroid of Canada Ltd. v. Minister of National Revenue, 72 DTC 1532, confirms the view that mine tailings are not considered to be a mineral resource under subsection 248(1) of the Act. However, paragraph 20(1)(v.1) of the Act permits a resource allowance as determined under Regulation 1210 with respect to resource profits "...in respect of...mineral resources in Canada". In 1988 we opined that mine tailings may be ore from a mineral resource such that income from processing tailings may qualify for resource allowance. In order to so qualify, the tailings must be "ore" within the definition found in subsection 1206(1) of the Regulations and the tailings are not processed beyond the prime metal stage or its equivalent. Where the product from reprocessing tailings is not a mineral as the term is defined in subsection 248(1) of the Act, the income will not qualify for resource allowance under paragraph 1204(1)(b) of the Regulations.
As requested, we enclose photocopies of previous technical interpretations and the 1972 Tax Review Board decision for Baroid of Canada Ltd. v. Minister of National Revenue.
If you have any questions, please contact the writer.
Yours truly,
for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
Attachments
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© Her Majesty the Queen in Right of Canada, 1994
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