1981 federal budget-new rules for mining

"The budget that was tabled by Finance Minister MacEachen on November 12, 1981 will result in a major tax reform of Canada's income and sales tax systems, the likes of which have not been witnessed by taxpayers since 1971. All segments of the economy will be affected one way or another by the far-reaching budget proposals; the mining industry did not escape untouched.Important changes will be introduced which will alter some of the fundamentals of structuring mineral resource ventures in Canada. This month, Tax Notes examines these changes, and also summarizes the other highlights of this key federal budget.IntroductionFinance Minister MacEachen's budget, with its lower personal tax rates, loophole plugging and tax shelter bashing, represents the biggest shakeup in our tax system since tax reform in 1971. In his budget, presented in the House of Commons on November 12, Mr. MacEachen proposed substantially lower tax rates for middle and upper income individuals, with the top federal and provincial tax rate dropping to about 50%, but in return he eliminated most of the opportunities for individuals, and corporations, to reduce or defer taxes through a wide variety of tax shelter and tax planning mechanisms.Although many of those budget proposals that dealt with the resource industries focused on the implementation of the September 1, 1981 agreement reached by the federal and Alberta governments concerning the National Energy Program (see Tax Notes in the December 1981 issue of the Bulletin), the budget also contained some proposed amendments that would have significant implications for investment in the mining industry.This month, Tax Notes examines these latter proposals, and also summarizes very briefly those budget proposals which are not unique to the resource sector."