Operators that carry out processing activities can deduct the processing allowance in calculating both their annual earnings from a mine and the mine-mouth output value for the mine for a fiscal year.

The processing allowance is equal to the portion of the cost of property used that is associated with processing ore from the mine, multiplied by:

• 10%, if the operator does not carry out any activities involving the smelting, refining or hydrometallurgy of the ore;
• 10%, if the operator carries out only activities involving the concentration, smelting, refining or hydrometallurgy of ore from a gold or silver mine;
• 13%, if the operator carries out, exclusively outside Québec, activities involving the smelting, refining or hydrometallurgy of ore that is not ore from a gold or silver mine (the rate is reduced by 3% where the property is used for concentrating ore);
• 20%, if the operator carries out, in Québec, activities involving the smelting, refining or hydrometallurgy of ore that is not ore from a gold or silver mine (the rate may be reduced by 7% where the property is used in processing ore that is not smelted or refined in Québec, and by 10% where the property is used for concentrating ore).

The maximum amount that an operator can deduct as a processing allowance for a fiscal year is the greater of the following amounts:

• 75% of the annual earnings from the mine for the fiscal year before deduction of the processing allowance, the additional depreciation allowance, the additional allowance for a northern mine and the additional allowance for a mine situated in Northern Québec;
• 30% of the mine-mouth output value for the year before deduction of the processing allowance.