The maximum amount that operators can deduct as a depreciation allowance in respect of class 1, class 2 and class 3 property in calculating the annual earnings from a mine is the least of the following amounts:

• the capital cost of the property of the class that was used in the operation of the mine, multiplied by the depreciation rate that applies to the property;
• the undepreciated capital cost of the property of the class that was used in the operation of the mine at the end of the fiscal year;
• zero (where the operator no longer owns property of the class at the end of the fiscal year).

The maximum amount that operators can deduct as a depreciation allowance in respect of class 4 property in calculating the annual earnings from a mine is 30% of the undepreciated capital cost of the property of that class that is used in the operation of the mine at the end of the fiscal year. If an operator no longer owns property of the class at the end of the fiscal year, the allowance is equal to zero.

Operators can deduct the depreciation allowance in respect of class 4 property for a fiscal year in calculating the annual earnings from a mine they operate only if they deducted the maximum amount in respect of class 1, class 2 and class 3 property for the same fiscal year.

Class 1

Any road, building or equipment acquired before April 1, 1975, that is used in the mining operation is included in class 1.

Class 2

Any road, building or equipment acquired after March 31, 1975, but before May 13, 1994, that is used in the mining operation is included in class 2.

Class 3

Any road, building, equipment or service material acquired after May 12, 1994, but before March 31, 2010, that is regularly used in the mining operation is included in class 3. Property acquired after March 30, 2010, but before March 31, 2011, is also class 3 property if it was acquired in accordance with an agreement signed no later than March 30, 2010, or if its construction had begun before that date.

Class 4

Any road, building, equipment or service material acquired after March 30, 2010, that is regularly used in the mining operation, and that is not class 3 or class 4A property, is included in class 4.