3 (1) Every operator is liable for and shall pay a tax for a taxation year equal to the amount calculated using the formula, [( A – B ) × C] + [(D – E) × 0.05] in which, “A” is the amount of the operator’s profit, if any, as determined under subsection (5) for the taxation year, from all mines, other than remote mines, in which the operator has an interest, “B” is the amount calculated under subsection (1.2) for the taxation year, “C” is the tax rate for the taxation year as determined under subsection (3.1), “D” is the amount of the operator’s profit, if any, as determined under subsection (7) for the taxation year, from all remote mines in which the operator has an interest, and “E” is the amount calculated under subsection (1.3) for the taxation year. 2001, c. 23, s. 151 (1). Deemed not to be a remote mine (1.1) A remote mine for which an election is made by an operator under subsection 4 (4.1) is deemed not to be a remote mine for the purposes of determining the amount of tax payable under this Act for a taxation year before the first taxation year in which the operator treats the mine as a remote mine.  2001, c. 23, s. 151 (1). Calculation of “B” (1.2) The variable “B” in subsection (1) for a taxation year is the amount calculated using the formula, F × A / (A + D) in which, “A” has the same meaning as in subsection (1), “D” has the same meaning as in subsection (1), and “F” is the amount of the operator’s annual deduction for the taxation year, as determined under subsection (2) for the taxation year. 2001, c. 23, s. 151 (1). Calculation of “E” (1.3) The variable “E” in subsection (1) for a taxation year is the amount calculated using the formula, F × D / (A + D) in which, “A”   has the same meaning as in subsection (1), “D” has the same meaning as in subsection (1), and “F” has the same meaning as in subsection (1.2). 2001, c. 23, s. 151 (1). Annual deduction (2) The amount of an operator’s annual deduction for a taxation year is the amount claimed by the operator, not exceeding the lesser of, (a) the proportion of $500,000 that the number of days in the taxation year is of 365; and (b) the sum of the amounts determined under section (3) for the taxation year for each mine in which the operator has an interest.  2001, c. 23, s. 151 (1). Annual deduction, associated corporations (2.1) Despite subsection (2), associated corporations who are operators of one or more mines shall claim annual deductions for a taxation year in amounts that in total do not exceed $500,000.  2001, c. 23, s. 151 (1); 2004, c. 16, Sched. D, Table. Part interest (3) The amount determined under this subsection in respect of an operator’s interest in a mine is the product of the operator’s interest in the mine multiplied by the lesser of, (a) $500,000; and (b) if applicable, the amount determined under subsection (4) in respect of the mine.  R.S.O. 1990, c. M.15, s. 3 (3). Tax rate (3.1) The tax rate for an operator’s taxation year is the decimal number that is the total of each of the amounts calculated using the following formulas, for which the variables are defined in subsection (3.2): 1. A/T   0.2 2. B/T   0.18 3. C/T   0.16 4. D/T   0.14 5. E/T   0.12 6. F/T   0.10 2000, c. 10, s. 21 (2). Same (3.2) For the purposes of subsection (3.1), “A” is the number of days in the taxation year before May 2, 2000, “B” is the number of days in the taxation year after May 1, 2000 and before January 1, 2001, “C” is the number of days in the taxation year after December 31, 2000 and before January 1, 2002, “D” is the number of days in the taxation year after December 31, 2001 and before January 1, 2003, “E” is the number of days in the taxation year after December 31, 2002 and before January 1, 2004, “F” is the number of days in the taxation year after December 31, 2003, “T” is the total number of days in the taxation year.  2000, c. 10, s. 21 (2). Part year production (4) Where a mine is out of production in a taxation year for sixty or more consecutive days, the amount determined under this subsection for the purpose of clause (3) (b) is that proportion of $500,000 that the number of days in the taxation year that the mine has been in production is of 365.  R.S.O. 1990, c. M.15, s. 3 (4). Profit, mines other than remote mines (5) An operator’s profit for a taxation year from all mines, other than remote mines, in which the operator has an interest is the amount, if any, by which the aggregate of, (a) the operator’s proceeds for the taxation year from the mines, other than amounts included in the computation of tax payable under this Act for a prior taxation year in respect of the mines; (a.1) the portion of any amount received, or that can reasonably be considered to have been received, in the taxation year by the operator as compensation under an insurance policy or otherwise for damage in relation to a mine in which the operator has an interest, or in relation to the operation of the mine, if an amount in respect of the damage has been deducted by the operator in computing the operator’s profit or loss, if any, for the taxation year or a prior taxation year; (a.2) the portion of any amount received, or that can reasonably be considered to have been received, by the operator in the taxation year as a refund, reimbursement, contribution or allowance or as assistance (whether as a grant, subsidy, forgivable loan, deduction from tax, allowance or any other form of assistance), in respect of, (i) an amount included in, or deducted as, the capital cost of property, or (ii) an outlay or expense, if a deduction for the amount has been allowed in computing the operator’s profit or loss for the taxation year or a prior taxation year, and to the extent that the amount was not otherwise included in computing the operator’s profit, or deducted in computing, for the purposes of this Act, any balance of undeducted expenditures, allowances, outlays, or other amounts, for the taxation year or a prior year, exceeds the aggregate of, (b) the expenses incurred by the operator in the taxation year that are not otherwise deductible under this subsection, to the extent that the expenses are attributable to the production of output from the mines; (c) the operator’s operating and maintenance expenses incurred in the taxation year with respect to social assets in Ontario for the mines, after deducting all rents, fees, grants and other payments received by the operator during the taxation year in connection with those expenses; (d) the administrative and overhead expenses incurred by the operator in the taxation year, to the extent the expenses are reasonably attributable to the production or sale of output of the mines; (e) the expenses incurred by the operator in the taxation year in respect of scientific research conducted in Canada or product use development research conducted in Canada, to the extent the research is related to output of the mines; (f) the donations made by the operator in the taxation year for charitable, educational or benevolent purposes that are reasonably related to mining operations in Ontario, other than donations that are reasonably related to any remote mines in which the operator has an interest; (g) an amount not exceeding the maximum amount deductible by the operator for the taxation year in respect of exploration and development expenditures, as determined under subsection (13), less the amount, if any, deducted by the operator for the taxation year under subsection (8) or (9) in respect of those expenditures; (h) an amount not exceeding the operator’s allowance for depreciation for the taxation year, calculated in accordance with subsection (12), less the allowance for depreciation, if any, deducted by the operator for the taxation year under subsection (8) or (9); (i) the expenses and outlays incurred by the operator in the taxation year for the transportation of output from the mines to the point of delivery of the output to purchasers; (j) such reserves and deductions as may be prescribed for the purposes of determining an operator’s profit from mines that are not remote mines; (k) the operator’s prescribed processing allowance for the taxation year, other than its processing allowance for the year in respect of remote mines in which it has an interest; and (l) the amount, if any, of the operator’s remote mine loss deduction, as determined under subsection (6), in respect of any remote mines in which the operator has an interest.  2001, c. 23, s. 151 (2); 2011, c. 9, Sched. 24, s. 2 (1, 2). Remote mine loss deduction (6) The amount of an operator’s remote mine loss deduction for a taxation year is the amount calculated using the formula, (G – H) × (0.05/C) in which, G” is the sum of all amounts, if any, each of which is the operator’s loss for the taxation year from a remote mine in which the operator has an interest, as determined under subsection (9), “H” is the amount by which the sum of the operator’s profit for the taxation year from each remote mine in which the operator has an interest, as determined under subsection (8), exceeds the amount, if any, claimed by the operator under subsection 3.2 (4) for the taxation year, and “C” is the tax rate for the taxation year as determined under subsection (3.1). 2001, c. 23, s. 151 (2). Profit from all remote mines (7) An operator’s profit for a taxation year from all remote mines in which the operator has an interest is the amount calculated using the formula, I – (J + K + L) in which, “I” is the sum of all amounts, if any, each of which is the operator’s profit for the taxation year from a remote mine, as determined under subsection (8), “J” is the amount, if any, deducted under subsection 3.2 (4) by the operator for the taxation year, “K” is the sum of all amounts, if any, each of which is the operator’s loss for the taxation year from a remote mine, as determined under subsection (9), and “L” is the amount, if any, of the operator’s loss for the taxation year from mines that are not remote mines, as determined under subsection (10). 2001, c. 23, s. 151 (2). Profit from remote mine (8) An operator’s profit, if any, from a remote mine for a taxation year is the amount, if any, that would be determined under subsection (5) for the taxation year if the operator were deemed to have no interest in any mine other than the remote mine during the taxation year, the remote mine were deemed not to be a remote mine and the following rules applied: 1. The only amounts deductible under clause (5) (g) are exploration and development expenditures made or incurred in respect of the remote mine for a purpose described in clause (b) or (c) of the definition of “exploration and development expenditures” in subsection 1 (1). 2. The amount deductible under clause (5) (h) is determined without reference to clause (12) (c). 3. No amount is deductible under clause (5) (l). 4. The allowance for depreciation under clause 3 (5) (h) is the amount equal to the aggregate of the maximum amounts calculated in accordance with clauses 3 (12) (a) and (b), subject to clauses 3 (12) (d) and (e) and subsection 3 (21).  2001, c. 23, s. 151 (2). Loss, remote mine (9) An operator’s loss for a taxation year from a remote mine is the amount, if any, by which the amount that would otherwise be determined under subsection (8) for the taxation year in respect of the remote mine would be less than zero.  2001, c. 23, s. 151 (2). Loss, mines other than remote mines (10) The amount of an operator’s loss, if any, for a taxation year from mines other than remote mines is the amount calculated using the formula, M × C/0.05 in which, “M” is the amount by which the sum of the amounts determined for the taxation year in respect of the operator for the purposes of clauses (5) (b) to (k) exceed the amount determined for the taxation year in respect of the operator under clauses (5) (a), (a.1) and (a.2), and “C” is the tax rate for the taxation year as determined under subsection (3.1). 2001, c. 23, s. 151 (2); 2011, c. 9, Sched. 24, s. 2 (3). (11) Repealed:  1992, c. 4, s. 1 (1). Calculation of allowance for depreciation (12) The operator’s allowance for depreciation for a taxation year in respect of depreciable property is, (a) the amount calculated in accordance with subsection (12.0.1) if the depreciable property is a processing asset or an asset for transporting processed mineral substances to market from the place where the processing is completed; (b) the amount calculated in accordance with subsection (12.0.3) if the depreciable property is a mining asset but not a mining asset for which an allowance for depreciation is calculated under clause (c); (c) where a mine is a new mine or a major expansion of an existing mine designated by the Minister for the purpose of this clause, an amount at the option of the operator, instead of the amount calculated under clause (b), in respect of mining assets acquired after the 7th day of March, 1978, and before completion of the project from a person dealing at arm’s length for use in the new mine or the major expansion, not exceeding the lesser of, (i) the operator’s profit for the taxation year from the new mine or the major expansion calculated in the prescribed manner, and (ii) the undepreciated capital cost of the mining assets as of the end of the taxation year (before making any deduction calculated under this clause for the taxation year); (d) despite clauses (a), (b) and (e), subsection (21) and clause 4 (3) (b), where the operator’s taxation year is less than 365 days, an amount not exceeding that proportion of the aggregate of the amounts determined under clauses (a) and (e), subsection (21) and clause 4 (3) (b) in respect of processing and transportation assets and clause (b) in respect of mining assets that the number of days in the taxation year is of 365; and (e) despite clause (a), where processing assets are situated outside Canada or assets for transporting processed mineral substances are used outside Canada, an amount not exceeding that proportion of the amount determined under clause (a), (i) in respect of processing assets, that the value of mineral substances mined in Ontario is to the total value of mineral substances fed into the processing plant situated outside Canada, or (ii) in respect of assets used for transporting processed mineral substances, that the value of processed product derived from output is of the total value of processed product transported by those assets.  R.S.O. 1990, c. M.15, s. 3 (12); 2002, c. 22, s. 137 (1). Same, processing and transportation assets (12.0.1) The amount of the operator’s allowance for depreciation under clause (12) (a) for a taxation year in respect of assets acquired in the taxation year or in a prior taxation year is the total of all amounts, if any, determined in respect of the assets referred to in that clause, each of which is an amount determined in respect of the assets acquired in the taxation year or a prior taxation year that does not exceed the lesser of, (a) 15 per cent of the capital cost of the assets acquired in the particular taxation year; and (b) the undepreciated capital cost, as of the end of the taxation year and before any deduction under subsection (12) is made for the taxation year, of the assets acquired in the particular taxation year.  2002, c. 22, s. 137 (2). Same (12.0.2) In calculating the operator’s allowance for depreciation under subsection (12.0.1) for the taxation year, the operator shall determine the lesser of the amounts described in clauses (12.0.1) (a) and (b) in respect of the assets acquired in each particular taxation year and then shall add the resulting amounts, if any, in order to determine the operator’s aggregate allowance for depreciation.  2002, c. 22, s. 137 (2). Same, certain mining assets (12.0.3) The amount of the operator’s allowance for depreciation under clause (12) (b) for a taxation year in respect of assets acquired in the taxation year or in a prior taxation year is the total of all amounts, if any, determined in respect of the assets referred to in that clause, each of which is an amount determined in respect of the assets acquired in the taxation year or a prior taxation year that does not exceed the lesser of, (a) 30 per cent of the capital cost of the assets acquired in the particular taxation year and after April 9, 1974 that have not been used previously in mining operations and 15 per cent of the capital cost of any other mining assets acquired in the particular year; and (b) the undepreciated capital cost, as of the end of the taxation year and before any deduction under subsection (12) is made for the taxation year, of the assets referred to in clause (a).  2002, c. 22, s. 137 (2). Same (12.0.4) In calculating the operator’s allowance for depreciation under subsection (12.0.3) for the taxation year, the operator shall determine the lesser of the amounts described in clauses (12.0.3) (a) and (b) in respect of the assets acquired in each particular taxation year and then shall add the resulting amounts, if any, in order to determine the operator’s aggregate allowance for depreciation.  2002, c. 22, s. 137 (2). Exception (12.0.5) Despite the re-enactment of clauses (12) (a) and (b) by section 137 of the Keeping the Promise For a Strong Economy Act (Budget Measures), 2002, those clauses, as they read immediately before being re-enacted, continue to apply with respect to an operator for a taxation year commencing after December 31, 1999 if both of the following conditions are satisfied: 1. Before October 30, 2002, the operator files a return under this Act for the taxation year. 2. In the return or in an adjustment to the return that is filed before October 30, 2002, the amount calculated under clause (12) (a) or (b) (as those clauses read immediately before being re-enacted) for the taxation year is based in whole or in part on assets that have been fully depreciated.  2002, c. 22, s. 137 (2). Same (12.1) The following rules apply if an operator has an interest in more than one mine during a taxation year and at least one of the mines is a remote mine: 1. The allowance for depreciation deductible by the operator in calculating the amount of the operator’s profit for a taxation year under subsection (5) or (8) or loss for the taxation year under subsection (9) or (10) is the amount that would be the operator’s allowance for depreciation for the taxation year under subsection (12) in respect of only the depreciable property that is reasonably related to the mine or mines in respect of which the calculation is made under subsection (5), (8), (9) or (10). 2. The total of all amounts deducted as an allowance for depreciation for a taxation year in respect of all mines in which the operator has an interest must not exceed the operator’s allowance for depreciation for the taxation year, as determined under subsection (12).  2001, c. 23, s. 151 (3). Exploration and development expenditures (13) For the purposes of clause (5) (g), the maximum amount deductible by an operator for a taxation year in respect of exploration and development expenditures is the aggregate of, (a) exploration and development expenditures incurred in Ontario by the operator to the extent that such expenditures qualified as exploration and development expenditures under this Act at the time they were incurred; and (b) exploration and development expenditures incurred by another person to the extent that, (i) such expenditures qualified as exploration and development expenditures under this Act at the time they were incurred by the other person, and (ii) such expenditures qualify to be renounced and have been renounced by the other person in favour of the operator under subdivision e of Division B of Part I of the Income Tax Act (Canada) and have not been deducted by the other person under this Act or in the calculation of taxable income of the other person under Part I of the Income Tax Act (Canada), less the aggregate of, (c) all amounts deducted under this Act by the operator in any previous taxation year in respect of exploration and development expenditures; (d) all amounts allowed as eligible exploration expenses under the Ontario Mineral Exploration Program Act; (e) the amount of any assistance or benefit from a government, municipality or other public authority in respect thereto, including any grant, subsidy, forgivable loan, investment allowance or other form of assistance or benefit received or receivable by the operator, other than a grant or tax credit under the Ontario Mineral Exploration Program Act; and (f) all exploration and development expenditures that qualify to be renounced and have been renounced by the operator in favour of another person under subdivision e of Division B of Part I of the Income Tax Act (Canada).  R.S.O. 1990, c. M.15, s. 3 (13). Reduction of capital cost (14) For the purposes of this section, where an operator has deducted an amount under subsection 127 (5) of the Income Tax Act (Canada) in respect of depreciable property or has received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan or any other form of assistance, the capital cost of the property shall be deemed to be the amount by which the aggregate of, (a) the capital cost thereof to the operator determined without reference to this subsection; and (b) the part, if any, of the assistance that has been repaid by the operator before the disposition thereof by the operator, exceeds the aggregate of, (c) all amounts deducted under subsection 127 (5) of the Income Tax Act (Canada); and (d) the amount of assistance the operator has received or is entitled to receive in respect of that property before the disposition thereof by the operator.  R.S.O. 1990, c. M.15, s. 3 (14). Non-allowable deductions (15) No allowance or deduction shall be claimed or made under this section in respect of, (a) an outlay, loss or replacement of capital, a payment on account of capital or an amount in respect of depreciation, amortization, obsolescence or depletion, unless expressly permitted by this Act; (b) interest or dividends paid; (c) royalties for the right to extract mineral substances, or use real property in connection with the extraction of mineral substances, paid to any person other than Her Majesty in Right of Canada or Ontario; (d) any income or profits tax and any tax on capital paid to any jurisdiction; (e) a fine or penalty, other than a prescribed fine or penalty, imposed after March 23, 2006 under the law of a country or of a political subdivision of a country, including a state, province and territory, by any person or public body that has authority to impose the fine or penalty; and (f) an outlay made or expense incurred, before or after the day this clause comes into force, for the purpose of doing anything that is an offence under section 3 of the Corruption of Foreign Public Officials Act (Canada) or under any of sections 119 to 121, 123 to 125, 393 and 426 of the Criminal Code
(Canada) or an offence under section 465 of the Criminal Code (Canada) as it relates to an offence described in any of those sections.  R.S.O. 1990, c. M.15, s. 3 (15); 2006, c. 33, Sched. S, s. 1. Undepreciated capital cost (16) The undepreciated capital cost of any depreciable property at any time means the amount by which the aggregate of, (a) the capital cost of the property acquired before that time; and (b) all amounts included in profit by virtue of subsection (17) for a taxation year ending prior to that time, exceeds the aggregate of, (c) the total of the amounts deducted under this Act before that time as an allowance for depreciation with respect to the property; (d) for each disposition of the property or part thereof, the lesser of, (i) the proceeds of disposition of the property or part, and (ii) the capital cost of the property or part; and (e) the total of the amounts not deductible under this Act as a result of the application of clause (12) (e) or subsection (21) in respect of an allowance for depreciation.  R.S.O. 1990, c. M.15, s. 3 (16). Recapture (17) Where, at the end of a taxation year, the aggregate of all amounts determined under clauses (16) (c) and (d) exceeds the aggregate of all amounts determined under clauses (16) (a) and (b), the excess shall be deemed to be proceeds for the purposes of clause (5) (a).  R.S.O. 1990, c. M.15, s. 3 (17). Where not dealing at arm’s length (18) Where any property is acquired from or transferred to a person not dealing at arm’s length with the operator, the capital cost of the property to the purchaser for the purposes of this Act and the proceeds of disposition of the property for the purposes of this Act shall be deemed to be, (a) the amount or amounts determined in the prescribed manner where the property is depreciable property referred to in subsection (12); and (b) fair market value where the property is not depreciable property referred to in subsection (12).  R.S.O. 1990, c. M.15, s. 3 (18). Idem (19) Where output from a mine is sold to a purchaser who does not deal at arm’s length with the operator, the amount of the proceeds for the purposes of clause (5) (a) shall be deemed to be the fair market value of the output.  R.S.O. 1990, c. M.15, s. 3 (19). Idem (20) Where any goods or services are obtained or acquired from a supplier who does not deal at arm’s length with the operator for an amount that exceeds the fair market value of the goods or services, no amount in excess of the fair market value of the goods or services shall be deductible under subsection (5).  R.S.O. 1990, c. M.15, s. 3 (20). Reduction in processing costs (21) For the purposes of clauses (5) (b), (c), (d), (e), (i) and (j), (12) (a) and 3.1 (3) (a), where a processing plant owned and operated by the operator is, (a) located in Ontario, the amount of the operator’s expenses, outlays or allowances relating to processing shall be reduced by the proportion that the value of the input of mineral substances mined in Canada outside Ontario is of the total value of the input of mineral substances to the processing plant; or (b) located in Canada outside Ontario, the amount of the operator’s expenses, outlays or allowances shall be reduced by the proportion that the aggregate of the value of input of, (i) mineral substances from Ontario mines, other than mineral substances from the operator’s Ontario mines, and (ii) mineral substances from mines located outside Ontario, whether from the operator’s mines or not, is of the total value of the input of mineral substances to the processing plant.  R.S.O. 1990, c. M.15, s. 3 (21); 1992, c. 4, s. 1 (2). Processing plant located outside Canada (22) No deduction shall be made under clauses (5) (c), (d), (e) and (f) for expenses and outlays related to processing at an operator’s processing plant located outside Canada.  R.S.O. 1990, c. M.15, s. 3 (22). Section Amendments with date in force (d/m/y) 1992, c. 4, s. 1 (1, 2) - 25/06/1992 2000, c. 10, s. 21 (2)
- 02/05/2000 2001, c. 23, s. 151 (1-3) - 07/05/1996 2002, c. 22, s. 137 (1, 2) - 31/12/1991 2004, c. 16, Sched. D, Table - 01/01/2004 2006, c. 33, Sched. S, s. 1 (1) - 23/03/2006; 2006, c. 33, Sched. S, s. 1 (2) - 20/12/2006 2011, c. 9, Sched. 24, s. 2 (1-3) - 12/05/2011