Exploration and Development Expense (Québec)

Exploration and development expenses are costs incurred to search for, evaluate, and develop mineral or petroleum resources. These expenses are deductible for tax purposes, often with incentives to encourage investment in Canadian resource industries. The deductions can be claimed by companies or flowed through to investors via special arrangements like flow-through shares

Canadian Exploration Expense (CEE): Costs incurred to determine the existence, location, and extent of mineral resources or oil and gas in Canada. As of 2018, CEEs are generally 100% deductible in the year they are incurred.
Canadian Development Expense (CDE): Costs incurred for the development of an oil or gas well or a mine in Canada. CDEs are deductible on a declining balance basis, typically at a 30% rate.
Foreign Resource Expense (FRE): Costs incurred outside of Canada by a Canadian company. These are deducted on a country-by-country basis.
Resource Deductions: In Quebec, specific tax deductions are available for investments in the resource industry, particularly those made through flow-through shares. The deductions encourage exploration and development in the province's mining and resource sectors.

Exploration expenses incurred in Quebec: Additional deductions

In Quebec, additional resource deductions are available to investors in flow-through shares of resource companies that undertake eligible exploration and development in the province. These are claimed on specific lines of the Quebec tax return based on the information provided on the RL-11 or RL-15 slips.

Deduction for Québec exploration expenses (line 250): This deduction is for qualifying exploration expenses incurred in Quebec that are eligible for the additional deduction for Quebec resources. The relevant amount is typically found in box D of the RL-11 slip or boxes 32 and 62 of the RL-15 slip.
Additional deduction for Québec resources (line 287): This deduction is a strategic measure by Quebec to support its resource industry. Investors can claim up to 100% of the exploration base related to these expenses, with details provided on the RL-11 slip for calculation. Note that recent budgets have suggested this deduction for certain expenses may be phased out.
Deduction for share- and security-issue expenses (line 297): This allows for the deduction of expenses a resource company incurred in issuing shares or securities, provided these expenses were waived in the investor's favor. The amount is indicated in box H of the RL-11 slip or box 65 of the RL-15 slip
Mineral Exploration Tax Credit (METC): A non-refundable federal credit equal to 15% of eligible flow-through mining exploration expenses renounced by a corporation to an investor. The credit reduces federal tax payable and is claimed using information from Form T101 or T5013, RL-15.

Do not include the following on line 241:

The deduction for Québec exploration expenses that give entitlement to the additional deduction for Québec resources (this amount is to be entered on line 250);
The additional deduction for Québec resources (this amount is to be entered on line 287);
The deduction for share- and security-issue expenses related to Québec resources (this amount is to be entered on line 297).

Example :

Robert, a Quebec investor with a high tax rate, invests $10,000 in flow-through mining shares in 2025. The company renounces 100% of CCEE to him and issues T101/T5013 (federal) and RL-11 (Québec).

Answer: On federal return, he deducts $10,000 CCEE (line 22400) and claims a 15% METC ($1,500). On his Québec return, he deducts $10,000 (line 250) and additional deduction on line 287 of TP1 return.

How to do in TaxTron? In the Investment Expenses section, choose Resource Development Expenses and input the amount in the appropriate tab