Before calculating an operator's mining tax on annual profit, you must calculate the annual earnings for each of the operator's mines, as well as the operator's annual profit.

As a rule, the annual earnings of an operator's mine for a fiscal year are equal to the gross value of the operator's annual output that is reasonably attributable to the operation of the mine, less the following amounts:

• the amount of expenses that the operator incurred for the fiscal year that is attributable to this portion of the gross value of the operator's annual output;
• the following allowances, that the operator deducts for the fiscal year for the mine:
  • depreciation allowance,
  • post-production development allowance,
  • processing allowance,
  • additional depreciation allowance,
  • additional allowance for a northern mine, and
  • additional allowance for a mine situated in Northern Québec.

Adjustments will also have to be made in calculating the annual earnings in situations such as the following:

• In the fiscal year, the operator alienates, in favour of a person to whom the operator is not related, gemstones that have not been mixed with other gemstones, if the value of the particular gemstones was taken into consideration in the calculation of the gross value of the operator's annual output for a previous fiscal year.
• The valuation method that the operator used to determine the gross value of annual output for the fiscal year is different from the one used for the previous fiscal year (the operator must obtain our authorization to change methods).

The above adjustments increase or reduce the annual earnings.