Sale of mining operations-basic tax considerations

CIM Bulletin, Vol. 73, No. 813, 1980
R. D. BROWN, F.C.A, Senior Tax Partner Price Waterhouse & Co.
Abstract Higher metal prices have resulted not only in increased exploration and production, but also increased activity in the purchase of mining properties and mines. This article discusses some of the basic income tax considerations to be taken into account on the disposal of an interest in a mining claim or an active mining operation. It notes the importance of an appropriate allocation of the purchase price amongst the various categories of assets, and discusses the tax implications to both vendor and purchaser of the transfer of the common types of assets involved in mining operations. In the space available, the article can only outline the basic tax considerations, and point to areas where both vendor and purchaser need to be on guard to protect their tax position.
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