Northwest Territories Mining Regulations (SOR/2014-68)

Marginal note:Deductions

• 70 (1) In calculating the value of the output of a mine for a fiscal year, only the following deductions and allowances may be claimed:

  • (a) the costs, incurred during the fiscal year, of sorting, valuing, marketing and selling the minerals or processed minerals produced from the mine;

  • (b) the costs, incurred during the fiscal year, of insurance, storage, handling and transportation to the processing plant or market, in respect of the minerals or processed minerals produced from the mine;

  • (c) the costs, incurred during the fiscal year, of mining and processing minerals or processed minerals from the mine;

  • (d) the costs, incurred during the fiscal year, of repair, maintenance or reclamation at the mine;

  • (e) the consideration paid by a member of a joint venture for minerals or processed minerals diverted from another member of the joint venture, when each member is delivering a separate mining royalty return in accordance with section 74;

  • (f) general and administrative costs incurred during the fiscal year for property, employees or operations at the mine that are not otherwise allocated to operating costs;

  • (g) exploration costs incurred during the fiscal year by an owner of the mine, other than on the mining property, if those costs have not been otherwise claimed as an allowance or deduction under these Regulations, in an amount not greater than 10% of the value of the output of the mine multiplied by the owner’s share of that output, calculated

    • (i) after deduction of the costs referred to in paragraphs (a) to (f), and

    • (ii) before the deduction of any depreciation allowance, mining reclamation trust contribution allowance, development allowance or processing allowance;

  • (h) subject to subsection (5), paragraphs (8)(d) and (9)(e) and subsection (10), a depreciation allowance for the depreciable assets of the mine, and for the depreciable assets of any facilities located outside the Northwest Territories that are used for the processing of minerals or processed minerals produced from the mine in an amount not exceeding the undeducted balance of the cost of those depreciable assets at the end of the fiscal year of the mine;

  • (i) a development allowance, not exceeding the undeducted balance at the end of the fiscal year of the mine of

    • (i) exploration costs incurred, before the date of commencement of production, on the mining property as constituted on the date of commencement of production and not deducted under paragraph (g) in respect of any other mine,

    • (ii) all costs incurred before the date of the commencement of production for the purposes of bringing the mine into production less the total of

      • (A) the value of any minerals or processed minerals produced from the mining property that were sold or transferred before the date of commencement of production, calculated in accordance with section 69, and

      • (B) the market value of any minerals or processed minerals produced from the mining property that are in inventory on the date of commencement of production, calculated in accordance with section 69,

    • (iii) exploration costs incurred on the mining property after the date of commencement of production,

    • (iv) costs incurred after the date of commencement of production for workings designed for continuing use, including the clearing, removing or stripping of overburden from a new deposit at the mine, the sinking, excavation or extension of a mine shaft, main haulage way or similar underground workings, the construction of an adit or other underground entry and the construction of a road or of tailings disposal structures at the mine, and

    • (v) if minerals or processed minerals are being produced in commercial quantities from a recorded claim or leased claim that was incorporated into the mining property after the date of the commencement of production of the mine, or from another mining property that was incorporated into the mining property on which the mine is located after the date of the commencement of production,

      • (A) if the claim or lease was purchased, the purchase price of the claim or lease or the amount referred to in clause (B), whichever is the lesser, or

      • (B) in any other case, the costs referred to in subparagraphs (i) and (ii) that were incurred on the incorporated claim or lease and that have not been previously claimed as a deduction or allowance under these Regulations;

  • (j) a mining reclamation trust contribution allowance, determined by the operator, not exceeding the undeducted balance at the end of the fiscal year of amounts contributed to the mining reclamation trust with respect to any environmental impact resulting from the mining of minerals from lands to which these Regulations apply;

  • (k) if minerals or processed minerals are processed by the operator of the mine before their sale or transfer, an annual processing allowance equal to the lesser of

    • (i) subject to subsection (2), 8% of the original cost of the processing assets used by the operator in the processing of the output of the mine during the fiscal year, and

    • (ii) 65% of the value of the output of the mine, after deduction of the amounts referred to in paragraphs (a) to (j); and

  • (l) if minerals or processed minerals from the mine are processed at another mine, or at any facilities located outside the Northwest Territories that are used for the processing of minerals or processed minerals produced from another mine that is owned by the operator or by a person related to the operator, the total of

    • (i) the amount of the costs of the other mine that are not deductible under paragraph (8)(b),

    • (ii) the amount by which the processing allowance for the other mine is reduced under paragraph (8)(c), and

    • (iii) the amount by which the undeducted balance of the original cost of the other mine’s depreciable assets is adjusted under paragraph (8)(d).

• Marginal note:Production or fiscal year less than 12 months

  (2) When a mine is in production for less than 12 months in a fiscal year or a fiscal year of a mine is less than 12 months,

  • (a) the deduction for processing allowance calculated under subparagraph (1)(k)(i) must be multiplied by one-twelfth times the number of months in the fiscal year that the mine was in production or the number of months in the shortened fiscal year, as the case may be; and

  • (b) each dollar amount in column 1 of the table to subsection 69(1) must be multiplied by one-twelfth times the number of months in the fiscal year that the mine was in production or the number of months in the shortened fiscal year, as the case may be.

• Marginal note:Deduction respecting related person

  (3) When the operator of a mine claims a deduction for costs incurred in a transaction with a related person, the costs allowed as a deduction under this section must be the amount of the actual costs incurred by the related person, exclusive of any profit, gain or commission to the related person or to any other related person.

• Marginal note:Depreciation allowance

  (4) A depreciation allowance may be claimed in respect of a depreciable asset in the fiscal year in which it is first used in the operations of the mine.

• Marginal note:Reduction in depreciation allowance

  (5) When an operator disposes of, or receives insurance proceeds in respect of, assets for which a depreciation allowance has been claimed,

  • (a) the undeducted balance of depreciable assets must be reduced by the lesser of

    • (i) the proceeds of disposition or insurance proceeds, as the case may be, and

    • (ii) the original cost of the asset; and

  • (b) when the lesser of the amounts referred to in subparagraphs (a)(i) and (ii) exceeds the undeducted balance of depreciable assets in the fiscal year in which the assets were disposed of, the excess must be included in the value of the output of the mine for that fiscal year.

• Marginal note:Depreciation allowance — proceeds of disposition

  (6) For the purposes of subsection (5), when the operator of a mine sells to a related person an asset for which a depreciation allowance has been claimed or removes the asset from the mine, the proceeds of disposition of the asset are the amount that could be expected to be realized from the sale of the asset to a person not related to the operator.

• Marginal note:Depreciation allowance — purchase cost

  (7) When the operator of a mine purchases from a related person an asset that is eligible for a depreciation allowance or transfers to the mine an asset from another mine owned by the operator, the cost of the asset for the purposes of calculating a depreciation allowance is the amount that the operator could be expected to pay to purchase that asset from a person not related to the operator.

• Marginal note:Rules respecting processing minerals not produced at the mine

  (8) When, in a particular fiscal year, a mine’s operator uses the mine’s depreciable assets, or any facilities located outside the Northwest Territories that are used for the processing of minerals or processed minerals produced from the mine, to process minerals or processed minerals other than those produced from the mine,

  • (a) the revenue earned from the sale or processing of those minerals or processed minerals must not be included in the value of the output of the mine;

  • (b) the deduction for the costs incurred during the fiscal year under paragraphs (1)(a) to (f) must be reduced by any costs incurred for the processing of minerals or processed minerals not produced from the mine;

  • (c) the original cost of the processing assets used to calculate the processing allowance amount under subparagraph (1)(k)(i) must be reduced by an amount equal to the original cost of the processing assets multiplied by the ratio of the costs incurred during the fiscal year under paragraphs (1)(a) to (f) for the processing of minerals or processed minerals not produced from the mine to the total costs incurred during the fiscal year, under those paragraphs, for the processing of all minerals or processed minerals at the mine; and

  • (d) the undeducted balance of the original cost of the mine’s depreciable assets at the end of the fiscal year must be adjusted to exclude an amount equal to the original cost of the depreciable assets used to process minerals or processed minerals not produced from the mine multiplied by the ratio of the costs incurred under paragraphs (1)(a) to (f) during that fiscal year and all prior fiscal years for the processing through those assets of minerals or processed minerals not produced from the mine to the total costs incurred under those paragraphs during that fiscal year and all prior fiscal years for the processing through those assets of all minerals and processed minerals at the mine.

• Marginal note:Rules respecting adjustment of calculations

  (9) When a mine produces minerals or processed minerals from lands to which these Regulations apply and any other lands,

  • (a) the deduction for the costs incurred during the fiscal year under paragraphs (1)(a) to (f) must be reduced by any costs incurred for the production of minerals or processed minerals from lands other than lands to which these Regulations apply;

  • (b) the original cost of the processing assets used to calculate the processing allowance under subparagraph (1)(k)(i) must be reduced by an amount equal to the original cost of the processing assets multiplied by the ratio of the costs incurred during the fiscal year under paragraphs (1)(a) to (f) for the processing of minerals or processed minerals produced from lands other than lands to which these Regulations apply to the total costs incurred during the fiscal year, under those paragraphs, for the processing of all minerals or processed minerals at the mine;

  • (c) the undeducted balance of costs eligible for the mine’s development allowance at the end of the fiscal year must be adjusted to exclude an amount equal to the costs referred to in subparagraph (1)(i)(ii) multiplied by the ratio of the costs incurred under paragraphs (1)(a) to (f) during that fiscal year and all prior fiscal years for the production of minerals or processed minerals from lands other than lands to which these Regulations apply to the total costs incurred under those paragraphs during that fiscal year and all prior fiscal years for the production of all minerals or processed minerals at the mine;

  • (d) the undeducted balance of costs eligible for the mine’s development allowance at the end of the fiscal year must be adjusted to exclude an amount equal to the costs of the workings referred to in subparagraph (1)(i)(iv) used in the production of minerals or processed minerals from lands other than lands to which these Regulations apply multiplied by the ratio of the costs incurred under paragraphs (1)(c) to (f) during that fiscal year and all prior fiscal years for the use of those workings in the production of minerals or processed minerals from lands other than lands to which these Regulations apply to the total costs incurred under those paragraphs during that fiscal year and all prior fiscal years for the use of those workings in the production of all minerals or processed minerals at the mine; and

  • (e) the undeducted balance of the original cost of the mine’s depreciable assets at the end of the fiscal year must be adjusted to exclude an amount equal to the original cost of the depreciable assets used in the production or processing of minerals or processed minerals produced from lands other than lands to which these Regulations apply multiplied by the ratio of the costs incurred under paragraphs (1)(a) to (f) during that fiscal year and all prior fiscal years for the use of those assets for the production or processing of minerals or processed minerals produced from lands other than lands to which these Regulations apply to the total costs incurred under those paragraphs during that fiscal year and all prior fiscal years for the use of those assets for the production or processing of all minerals or processed minerals produced at the mine.

• Marginal note:Timing and other requirements respecting adjustments

  (10) The adjustments referred to in paragraphs (8)(d) and (9)(c) to (e) must each be calculated at the end of each fiscal year of the mine with the difference between the amount calculated for that fiscal year and the amount calculated for the previous fiscal year being added to or subtracted from the undeducted balance of the depreciable assets or the undeducted balance of the costs eligible for the development allowance, as the case may be.

• Marginal note:Limitations on deductions and allowances

  (11) Despite any other subsection of this section, no deduction or allowance can be made in respect of a mine in relation to

  • (a) the capital cost of the depreciable assets, other than those subject to the depreciation allowance under paragraph (1)(h);

  • (b) depletion in the value of the mine or mining property by reason of exhaustion of the minerals;

  • (c) if an owner or the operator of the mine is a corporation,

    • (i) remuneration and travel costs of directors,

    • (ii) stock transfer agents’ fees,

    • (iii) shareholders’ meetings or the preparation of shareholders’ reports, and

    • (iv) legal, accounting and other costs incurred in connection with incorporations, reorganizations, financing or security or stock issues;

  • (d) interest on any debt, including an overdraft, loan, mortgage, advance, debenture or bond, that is capitalized or expensed for accounting purposes;

  • (e) remuneration of executive officers, administrative and consulting costs and costs in respect of offices not located at the mine site, unless that remuneration or those costs are directly related to operations of the mine or to the marketing and selling of minerals or processed minerals produced from the mine;

  • (f) the taxes on profits, property or capital, or payments in lieu of those taxes, paid to any level of government and the cost of preparing returns in respect of those taxes, except for customs duties, sales and excise taxes not otherwise refundable to the operator, for any taxes related to the employment of employees, and for the cost of preparing a return in respect of those taxes;

  • (g) the royalties paid for the use of mining property, the royalties calculated on revenue, production or profits of the mine, and the cost of calculating any royalties other than the royalties paid or payable under these Regulations;

  • (h) payments made to an organization, community or corporation, including an Aboriginal organization, community or corporation, that are not attributable to the provision of goods and services directly related to the development and operation of the mine or to prospecting and exploration on lands to which these Regulations apply;

  • (i) payments made for the use or lease of, or access to, the surface of the land on which the mine is located;

  • (j) discounts on bonds, debentures, shares or sales of receivables;

  • (k) increases in reserves or provisions for contingencies, other than in respect of a mining reclamation trust;

  • (l) dues and memberships for persons, other than employees, involved in the operation of the mine;

  • (m) insurance premiums other than those paid for minerals or processed minerals produced from the mine;

  • (n) costs incurred during the fiscal year to produce revenue that does not form part of the value of the output of the mine;

  • (o) subject to subparagraph (1)(i)(v), the purchase price of a recorded claim, a lease of a recorded claim or a mine;

  • (p) the purchase price of any financial instrument;

  • (q) charitable donations;

  • (r) advertising costs not directly identified with the output of a particular mine;

  • (s) any cost not evidenced in accordance with generally accepted auditing standards;

  • (t) the cost of inventories of fuel, other consumables and spare parts that have not been consumed in the operation of the mine;

  • (u) the costs of staking or recording a claim, or the cost of surveying the claim for the purpose of taking it to lease;

  • (v) rent paid for the lease of a recorded claim under these Regulations;

  • (w) the cost of preparing any financial information not required for the calculation of mining royalties;

  • (x) any cost incurred after any precious stones have been last valued by the mining royalty valuer, if those stones were sold or transferred to a related party, or to any other person if proof of the disposition is not provided, or if the stones were cut and polished before their sale or transfer;

  • (y) any costs related to public, community or government relations unless those costs were incurred for environmental assessments or other regulatory processes; and

  • (z) any fines, penalties or bribes.