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PROVINCIAL AND TERRITORIAL TAXATION - British Columbia - Mines and mineral tax

Tuesday, August 24, 2021 @ 5:46 AM  


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Application by the Province for leave to appeal a decision determining that the respondent Teck Metals could deduct 100 per cent of the exploration costs associated with a mine. Teck was one of two partners in a general partnership that operated a mine in B.C. Teck was required to fund 100 per cent of the Galore Creek Mine exploration costs pursuant to the initial funding commitment. Under the partnership agreement, it was also entitled to claim 100 per cent of those exploration costs for the purposes of the Mineral Tax Act. Teck was also the exclusive operator of the Highland Valley Copper Mine. Teck decided to allocate its proportionate share of the Galore Creek Mine exploration costs from 2010 and 2011 to the Highland Valley Copper Mine for the 2011 and 2012 fiscal years. In doing so, it claimed a 100 per cent proportionate share of the Galore Creek Mine exploration costs. The commissioner of mineral tax reduced the proportionate share of the exploration costs that Teck could deduct to 50 per cent and the Minister of Finance affirmed those assessments. The judge found it was clear from the partnership agreement that Teck was obligated to pay 100 per cent of the Galore Creek Mine exploration costs. She agreed with Teck that treating its expenditures under the initial funding commitment as capital contributions did not change the nature of the expenditures it was obligated to pay, nor did the requirement that both partners fund expenditures on a 50/50 basis after Teck’s initial funding commitment was met.

HELD: Application dismissed. The judge’s conclusion that Teck was obligated to pay 100 per cent of the Galore Creek Mine exploration costs and was thus entitled to claim them as its proportionate share hinged on her interpretation of the partnership agreement, not on her interpretation of the Mineral Tax Act. This was a matter of contractual, not statutory, interpretation. The issue the Province raised on the proposed appeal was thus not a general question of law. The proposed appeal would also not provide meaningful guidance regarding the general concept of capital contributions in the partnership context. This contractual interpretation issue was a matter of mixed fact and law, subject to a deferential standard of appellate review, and was of limited general importance. The proposed appeal did not raise a jurisdictional issue and there were no marked differences in the decisions below that appellate resolution would benefit.

Teck Metals Ltd. v. British Columbia, [2021] B.C.J. No. 1569, British Columbia Court of Appeal, F.F. Slatter, P.A. Rowbotham and J. Antonio JJ.A., July 26, 2021. Digest No. TLD-August232021003