Bill C-32, Canada’s new 30% Critical Mineral Exploration Tax Credit, explained

Multiple conditions must be met for targeted expenditures to qualify: Dentons lawyers

The new 30% critical mineral exploration tax credit

On December 15, 2022, Bill C-32, providing for a federal new non-refundable “30% Critical Mineral Exploration Tax Credit” (30% CMETC) received Royal Assent.

The 30% CMETC is a new tax credit aimed at increasing investment for certain mining companies exploring specifically for one or more of 15 critical minerals. The 30% CMETC targets mineral exploration expenditures incurred in Canada and renounced to flow-through share (FTS) investors as part of flow-through share agreements entered into after April 7, 2022, and on or before March 31, 2027. The 15 targeted critical minerals are nickel, lithium, cobalt, graphite, copper, rare earth elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals or uranium (Critical Mineral(s)). However multiple conditions have to be met for targeted expenditures to qualify to the 30% CMETC, some of which will be described and explained below.

Certification by a qualified professional

The FTS issuer corporation will be required to obtain a certification by a “qualified professional engineer or professional geoscientist,” which certification much be completed by said professional within the 12-month period immediately preceding the time when the flow-through share agreement is made. The qualified professional engineer or professional geoscientist must certify that the qualifying resource exploration expenditures will be incurred pursuant to an exploration plan that primarily targets Critical Minerals.

The certification to be completed by the qualified professional engineer or professional geoscientist must be “in the prescribed form,” form T100A-CERT, which has to be filed as an attachment to form T100A.

Certification from the Minister of Natural Resources

In order for an expense to be renounced to a FTS investors, thereby entitling them to deduct said expense and claim the 30% CMETC, the expense must qualify as a “flow-through critical mineral mining expenditure,” which requires the expense to first meet the definition of Canadian exploration expense (CEE). Qualifying as CEE necessitates, amongst other requirements, that the expense be incurred for the purpose of determining the existence, location, extent or quality of a “mineral resource” in Canada.

If the Critical Mineral with respect to which the expense is incurred does not meet the definition of “mineral resource,” despite all other conditions being met, the FTS investor will not be entitled to the 30% CMETC.

Unless a Critical Mineral is (i) a base or precious metal deposit or (ii) a lithium deposit[1], the Critical Mineral will only qualify as “mineral resource” if the FTS issuer corporation obtains a certification from the Minister of Natural Resources certifying that the principal mineral extracted is an industrial mineral contained in a non-bedded deposit.

Exploration activity “primarily targeting Critical Minerals”

FTS issuer corporations may be concerned by whether a mining exploration project will qualify for the 30% CMETC if, (i) contrary to what was initially expected, the mineral deposit turns out not to primarily contain Critical Minerals, or (ii) the Canada Revenue Agency (CRA) takes the position that a given project does not meet the 30% CMETC criteria.

The concern is valid, notably because under the new legislation introducing the 30% CMETC, mineral exploration companies are expected to anticipate that a mineral deposit being explored will primarily contain Critical Minerals and an exploration company can hardly know if a deposit primarily contains critical minerals at the time the FTS agreement is made.

According to our reading of the technical notes, it appears that as long as the Certification by a qualified professional provides that the resource exploration expenditures will be incurred pursuant to an exploration plan that primarily targets Critical Minerals and that completed based on proper evidence, then the targeted expenditures should be eligible for the 30% CMETC (as long as all other requirements are met). It would be improper for the CRA to reassess a taxpayer if the mineral deposit ends up not primarily containing Critical Minerals after an FTS issuance. Rather, the CRA should examine whether, in light of the certification of the qualified professional engineer or professional geoscientist, the mineral deposit could reasonably be expected to primarily contain Critical Minerals.

As the exploration work progresses, if the FTS issuer corporation realizes that a given mineral deposit being explored does not primarily contain Critical Minerals (e.g., if a non-critical mineral such as gold is found out to be the prominent mineral of the deposit), then the 30% CMETC would not be available anymore in regard to FTSs issued thereafter. It is very important to keep an eye out for any change in the primary component of a given mineral deposit, especially because taxpayers cannot claim the existing 15% federal mineral exploration income tax credit (for non-critical mineral resources) as a “fallback” option. In other words, if an investor claims the new 30% CMETC and such claim is subsequently denied by the CRA, the investor cannot then claim the existing 15% federal mineral exploration tax credit.

[1] The August 4, 2023 draft income tax legislation released by the Department of Finance amends the definition of “mineral resource” in subsection 248(1) of the Income Tax Act for it to mean, amongst other things, a mineral deposit in respect of which the principal mineral extracted is lithium. If the proposed amendment is sanctioned, any mineral deposit in respect of which the principal mineral extracted is lithium should qualify as a “mineral resource” pursuant to subsection 248(1) of the Income Tax Act.


Emmanuel Sala is a partner in Dentons’ Corporate and Tax groups and the Québec lead for the National Mining Committee. He advises Canadian and foreign companies on complex domestic and international corporate and tax matters—including mergers, acquisitions, corporate reorganizations, dispositions and financing transactions—and represents taxpayers at all stages of tax disputes with government authorities.

Emmanuel represents clients from multiple sectors, such as real estate, manufacturing and services, e-commerce and technology, consumer products, agribusiness and food products, agriculture, health products, software and telecommunications, biotechnology, and transportation. He has also developed extensive experience in energy, renewable energy, mining and oil & gas.

Emmanuel is actively involved in the creation of domestic and foreign private equity funds, and advises clients on the fiscal aspects of acquisitions, acquisitions of interest and joint investment agreements.

Emmanuel has developed an expertise in estate planning and estate settlement.

Emmanuel advises on the goods and services tax (GST), the harmonized sales tax (HST) and the Québec sales tax (QST).

As a chartered professional accountant (CPA), Emmanuel’s clients have the benefit of leveraging his ability to provide thorough analyses and understanding of financial, accounting and economic principles on any tax-related matter. 


Shereen Cook is an associate in Dentons' Corporate Law Group.

Shereen distinguishes herself by her hybrid practice which incorporates the provision of legal services in the areas of corporate law and tax law, both at the tax planning and dispute resolution levels.

Shereen regularly advises Canadian and foreign taxpayers in the areas of tax planning, corporate structuring, corporate reorganizations, purchases, sales and mergers and acquisitions, as well as domestic and cross-border financing. On a daily basis, Shereen is called upon to answer complex tax questions related to international tax issues. In addition, she assists taxpayers with large-scale voluntary disclosures in order for them to regularize their tax situation.

In addition, Shereen represents clients at all stages of tax dispute resolution with provincial and federal tax authorities. She has also been actively involved in the settlement of several cases prior to court hearings.

Shereen has a particular interest in estate planning and trust law and develops estate plans tailored to the needs of clients and their families.


Victor Qian is an associate in the Corporate and Tax groups of Dentons’ Montréal office.

He assists clients on a range of corporate and tax matters, including tax planning, mergers, acquisitions, corporate structuring, corporate reorganizations, and domestic and cross-border financing. In addition, he represents clients in tax litigation and tax controversy matters, from the audit and objection stages to appeals before the courts.

Victor was called to the Bar of Québec in 2019 after receiving a JD and an LLL with distinction from the University of Ottawa. He also holds a master’s degree in taxation (LLM Tax) from HEC Montréal, which he completed with a citation of excellence.

Prior to joining Dentons, Victor was an associate at a national law firm affiliated with an international professional services firm.



Emmanuel Sala