According to esteemed U.S. Supreme Court Justice Oliver Wendell Holmes Jr. “Taxes are what we pay for a civilized society”. But in a progressive society taxes must be seen to be fair and reasonable. The taxes imposed on freehold mineral owners are neither.
Freehold mineral rights owned by individuals are considered to be ‘Canadian Resource Property’ under federal tax legislation. This results in individual citizens who own mineral rights being effectively treated as if they were oil and gas companies and freeholders’ property being denied the capital gains treatment accorded to other forms of property. And, after paying federal tax on any royalty income, freeholders are subjected to double taxation through the freehold mineral taxes imposed by provincial governments.
Freeholders need to understand the taxation of their mineral rights to properly protect their non-renewable resources for both themselves, their children and their children’s children. FHOA can help.