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CHF has received a letter from PearTree Securities that has some significance for the Mining and Exploration companies that we work with, and their investors. They are asking participants in this sector to consider writing a letter, to ensure the federal government understands the negative impact that the changes to Alternative Minimum Tax (AMT) provisions will have on your project, your company, your employees, and the rural and remote and indigenous communities you work in. The newly revised AMT may significantly reduce the effectiveness of the flow-through regime and the successful Critical Mineral Exploration Tax Credit.
Annually more than a billion dollars are raised through the use of flow-through shares, with the vast majority being Charitable Flow-Through. Under the new taxation rules, introduced in the 2023 Federal Budget, effective Jan 1, 2024, flow-through subscribers will be limited to purchasing two-thirds of what they normally would for the purpose of donation or investment, impacting both the exploration sector and charities by reducing access to exploration capital (and flow-through shares donated) by about a third in all provinces.
It is often said that one hand of the Government doesn’t know what the other hand is doing, mostly because both hands are in someone else’s pocket. The current regime in Ottawa is big on denying tax breaks (what they call “loopholes”) to the rich. There are hundreds of millions of dollars in exploration expenditures at stake that support local employment and small businesses, including indigenous communities and businesses. Has the Government balanced the tax gain against the cost of the lost benefits or is it just trying to look good by “taxing the rich”? What do they say when those communities come looking for additional funding due to the lower economic activity? The other side of the coin is that the lost charitable donations are of the same scale. How do these organizations keep up the good work on so much less? What will they be told when they come seeking additional funding from the state?
PearTree asks that you address your letter jointly to the Hon. Chrystia Freeland, Deputy Prime Minister and Minister of Finance, the Hon. Jonathan Wilkinson, Minister of Energy and Natural Resources, and cc your local MP and the MP representing the area where your project is based, as well as PearTree. You can find your local MP’s email address and mailing address online here by typing in the appropriate postal code. Mail may be sent postage-free to any MP. Get more details on the letter-writing campaign here.
We strongly support this letter-writing program and ask everyone involved in the mining and exploration sector to participate.
Further detailed information can also be found here: JV Article: New tax disincentive could cripple flow-through share regime – The Northern Miner.
You may also wish to reach out to Alanna Clark, VP of Government Relations at PearTree Canada. Alanna can be reached at alanna.clark@peartreecanada.com.
Disclaimer
CHF Capital Markets has prepared this blog for general information purposes only. This document should not be considered a solicitation to buy or sell securities in the companies discussed herein. The information provided has been derived from sources believed to be reliable, but cannot be guaranteed. This blog does not take into account the recipients’ investment criteria, financial condition, or financial goals of individual recipients and other issues such as jurisdictional issues and/or legal restrictions that may exist for certain persons. Recipients should rely on their own due diligence and take their own professional advice before investing.
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