Mining Tax Credit Basics: Why Canada’s Exploration Funding Is in the Spotlight
Picture a small business that has proven its idea works but cannot find anyone to fund the expensive paperwork between the idea and the launch. That stuck middle stage is the heart of a debate playing out in Canada right now.
Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia and Yukon have written letters backing a push for a wider mining tax credit. The Canadian Press, in a report carried by BNN Bloomberg on Oct. 10, 2026, describes them as nearly half of Canada’s provinces and territories.
They are asking the federal Liberals to follow through on a 2025 election promise. The platform said the government would expand the activities eligible for mineral exploration tax credits to include the costs of engineering and feasibility studies for critical mineral projects.
The Association for Mineral Exploration recently launched a campaign on the issue and hopes to see the change in the upcoming budget. The six jurisdictions say the measure would help projects move from exploration to production.
One detail matters for the bigger picture: provinces and territories largely use Ottawa’s criteria to decide eligibility for their own mining tax credits.
The “Valley of Death” and the Numbers Behind the Push
Todd Stone, president of the Association for Mineral Exploration, described the pressure on junior mining companies. They are focused on proving their assets and moving from discovery toward becoming a mine, which means lots of drilling, engineering work, technical analysis and feasibility assessments. Stone said institutional investors generally do not want to fund that work.
He said the industry calls the stage where exploration projects stall for lack of funding the “valley of death.”
A report from Ernst & Young, commissioned by Stone’s group, found 2,052 projects in Canada currently in their early stages. Stone said that figure reflects the number of projects that have stalled.
The same report said covering feasibility and economic viability studies with tax credits could generate 14,000 to 34,000 jobs over 10 years. That would come on top of the projected best-case scenario of 184,000 new jobs in the sector.
It also projected that increased mining-sector spending would generate $68 billion in GDP over the next 10 years. That figure could rise by $5.2 billion to $12.2 billion if feasibility and viability studies were covered by government tax breaks.
B.C. Mining Minister Jagrup Brar raised a related concern in an August letter to federal Natural Resources Minister Tim Hodgson and Finance Minister François-Philippe Champagne. He wrote that major B.C. projects face financing challenges in the late stages of permitting, a period with little news for investors, and that single-asset companies find it especially hard to finance their projects.
What the Federal Government Says It Has Already Done
The finance minister’s office pointed to steps already taken. Champagne’s press secretary said the last budget expanded eligibility for the Critical Mineral Exploration Tax Credit to include 12 more critical minerals.
Spokesperson John Fragos also highlighted the new Productivity Mega Deduction, which the mining sector has praised. He said it will help companies expand operations and invest in new equipment, and that the government’s new measures cover 65 per cent of a mine’s assets.
Fragos noted that the 2025 budget amended the Income Tax Act to say that expenses for determining the quality of a mineral resource do not include feasibility study expenses. He said the mega deduction still gives junior companies breathing room early on, because it can apply to equipment they may need later in a mine’s life. A spokesperson for Hodgson declined to comment.
Industry voices see a gap. Pierre Hebert, CEO of the Nunavut and N.W.T. Chamber of Mines, said the mega deduction will help with costs such as setting up exploration camps, but it will not carry companies through the valley of death. In his view, feasibility studies are a required step that remain ineligible, and they can be costly.
Money Lessons From the Mining Tax Credit Debate
This story is about Canadian federal and provincial rules, so none of it applies directly to Philippine tax filings. The budgeting ideas underneath it are general, though, and worth borrowing.
- Know what “eligible” means. The whole dispute turns on which costs count. Before relying on any tax relief, check exactly which expenses qualify.
- Plan for the unglamorous middle. Companies stall between discovery and development because that stage is hard to fund. Your own big goals have a similar stretch, so set aside a dedicated buffer for it.
- Read the wording. One amendment about what counts as a quality-determination expense shaped the argument. Small phrases in tax rules can change who benefits.
- Treat early-stage risk seriously. The report notes that institutional investors shy away from funding these studies, a reminder that early ventures carry funding risk.
This is general education, not personalized financial or tax advice.
Mining Tax Credit FAQ
What is the “valley of death” in mining?
According to Todd Stone, it is the stage where exploration projects stall because companies cannot raise money for engineering, feasibility and technical studies.
Does the federal government agree the credit should widen?
The source does not show a commitment either way. Champagne’s office points to the 12 added critical minerals and the Productivity Mega Deduction, while industry voices say feasibility studies remain ineligible.
When could a decision come?
The Association for Mineral Exploration hopes the change lands in the upcoming budget. The source gives no date.
Your Next Step
Pick one tax relief or benefit you use or plan to use, and write down which expenses it actually covers. Then list the costs it does not cover, and build those into your budget so there are no surprises.
For Philippine rules, confirm the details with the Bureau of Internal Revenue or a licensed tax professional. And if you follow the Canadian story, watch the upcoming federal budget for any change to the mining tax credit.
