How do provincial potash mining taxes work?
The potash production tax is payable under the Mineral Taxation Act, 1983 (Saskatchewan). This tax consists of two components: a base tax of $11 (indexed) per K2O tonne of Saskatchewan potash sold and a profit tax of 15.0 to 35.0 percent on mine-by-mine profits less certain credits. In general terms, in 2009 we expect roughly 3 to 4 cents of every dollar of potash gross margin will be paid in provincial mining taxes. Where we fall within this range depends on several factors including potash price realizations, Canadian/US exchange rate, and the timing and amount of capital spending on potash projects in Saskatchewan. These taxes are not deductible for Canadian income tax purposes.
