The Canadian Government has announced plans to extend 15% exploration tax credits that are offered to junior mining companies for a year.
The plans also include the widening of the credits scope and are aimed at improving the mining sector that has been witnessing decline in commodity prices in addition to funding scarcity.
According to the government, the tax credit extension for investors in flow-through shares for an additional year until 31 March 2016 will support many small mining companies and is aimed at increasing exploration activity within the country.
Canadian Finance Minister Joe Oliver said: "Mining is key for Canada’s prosperity. About 380,000 Canadian jobs are in the mining and mineral processing industries, with the highest wages and salaries of all of Canada’s industrial sectors.
"When we strengthen this industry, we create jobs, growth, and long-term prosperity from coast to coast to coast. We are doing exactly that by cutting red tape, lowering taxes, and expanding free trade across the globe."
To be issued to finance a company’s exploration efforts, the flow-through shares allow junior mining companies to pass on a tax credit to investors that buy them.
The tax credit is expected to have helped the companies raise more than C$5.5bn ($4.4bn) for exploration since 2006.
The federal government also said it plans to change the law in a bid to ensure that costs that are associated with undertaking environmental studies and community consultations, required to obtain exploration permits, can be considered as exploration expenses.
The costs would make them deductible for tax purposes permitting the mining companies to fund them by issuing flow-through shares.
Canadian Minister of Natural Resources and Minister for the Federal Economic Development Initiative for Northern Ontario Greg Rickford said: "We are extending the mineral exploration tax credit to provide junior mining companies access to the venture capital they need to finance their exploration activities."