The Saskatchewan Mineral Exploration Tax Credit Program (SMETC) offers a non-refundable 10 per cent tax credit to Saskatchewan taxpayers who invest in eligible flow-through shares (FTS) issued by mining or exploration companies after March 31, 2011. This provincial tax credit follows the eligibility rules of the federal Investment Tax Credit for Exploration.

To encourage long-term, sustainable development of Saskatchewan's mineral resources and to enhance Saskatchewan's competitiveness in mineral exploration, a temporary tax credit (the SMETC) was introduced by the Government of Saskatchewan in October 2000, and reintroduced on April 1, 2008. The reintroduction demonstrates the government's commitment to encourage investment in the mineral exploration sector.

To be eligible for the SMETC, individuals, other than trusts, must have purchased eligible FTS (in accordance with section 66 of the federal Income Tax Act) from an approved mining exploration corporation after March 31, 2011.

Investments by partnerships must be broken down to individuals, and tax credit is based only on eligible flow-through exploration funds slated for expenditure within Saskatchewan.

A mineral exploration company wishing to issue FTS or flow-through warrants and take advantage of the tax credit must submit the following items to:

Planning, Evaluation and External Relations Branch
Saskatchewan Ministry of Energy and Resources
300 - 2103-11th Ave
Regina, Saskatchewan
S4P 3Z8

1. The business number of the corporation;
2. A copy of completed form T100-Part1 plus all other related documents required by Canada Revenue Agency (CRA);
3. The Selling Instrument T100 Identification Number (SITIN) or T100 Identification Number (TIN ) number issued by the federal authorities.

After the share sale, parts II and III of form T100 are submitted to CRA and copied to Saskatchewan Ministry of Energy and Resources (ER). Further, a completed Certificate of Planned Exploration Expenditure outlining the amount and value of the work to be conducted on each Saskatchewan disposition must be submitted to ER. If the work is of a reconnaissance nature over undisposed land, then the National Topographic System (NTS) reference of the survey area must be indicated.

To be eligibile for the SMETC, exploration companies must apply to ER. If the application is subsequently approved, the company will receive permission to issue up to a certain maximum amount of tax credits to its Saskatchewan investors. The company will issue credits on "SK - METC" forms which will be provided by ER upon approval. Copies of the completed forms are to be forwarded to ER. In the case of partnerships that have purchased eligible FTS, and have received a tax credit, it is the partnerships' responsibility to ensure that each of their members be issued the completed SK - METC form including each member's name, social insurance number, complete address and share in the tax credit. All documents issued by the partnerships to their members are to be copied to ER.

Subsequently, at the appropriate times, the corporation which has issued FTS must complete and file the appropriate areas of form T101 parts I, II and III with CRA and copies to ER. Further, a completed Certificate of Incurred Exploration Expenditure is required by ER when the project is complete.

For further details regarding the Saskatchewan Mineral Exploration Tax Credit Program, please refer to the Mineral Exploration Tax Credit Regulations, found on the Queen's Printer at www.publications.gov.sk.ca/details.cfm?p=1261.

Mineral exploration companies and Partnership Investors are required to complete the SK-METC Form to comply with the Mineral Exploration Tax Credit Regulations, and provide one completed copy to ER.

It is the responsibility of the corporation to ensure that tax credits issued do not exceed amounts stipulated by the regulations.

Please address any questions to Victor Zhang at (306) 787-1581 or e-mail victor.zhang@gov.sk.ca.