Additional Exploration Allowance
Operators can deduct the additional exploration allowance in respect of expenses incurred after May 12, 1994, and before March 31, 2010, in calculating their annual profit for a fiscal year.
The maximum amount that an operator can deduct as an additional exploration allowance for a fiscal year is equal to 50% of the lesser of the following amounts:
- the balance of cumulative exploration expenses;
- the operator's annual profit for the fiscal year, calculated before deduction of the additional exploration allowance.
As a rule, the balance of cumulative exploration expenses is equal to the expenses incurred after May 12, 1994, and before March 31, 2010, for exploration or underground core drilling work carried out in Québec, minus twice the amount deducted as an additional exploration allowance by the operator in calculating the annual profit for previous fiscal years.
As a rule, the balance excludes expenses that the operator renounced under the Québec or Canadian flow-through share regime.