Expanded critical minerals eligibility in Canada opens tax credit opportunities

Critical minerals are a cornerstone of Canada’s recent and expanded tax credits—and more minerals are now eligible as part of a push for increased competitiveness.

The 2025 federal budget included announcements that eligibility for the clean technology manufacturing investment tax credit (CTM ITC) and critical mineral exploration tax credit (CMETC) would expand to include new critical minerals for each credit.

Antimony, indium, gallium, germanium and scandium are now eligible for the CTM ITC, while businesses can claim the CMETC for bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin and tungsten.

This expanded eligibility carries several meaningful implications for Canadian businesses across the clean technology and natural resource sectors:

• More projects may now qualify for the credit: Businesses working with the newly added minerals—whether through exploration, extraction, upgrading, refining, or recycling—may gain access to additional incentives for the first time. This broadens the potential pool of eligible investments and could make projects that were previously out of reach more feasible.\

• Improved financial viability of capital-intensive operations: As a refundable credit, the CTM ITC applies regardless of a business’s tax position. This is particularly valuable for capital-intensive or early-stage mineral projects; the expanded eligibility could further improve project feasibility and speed up investment decisions. The CMETC updates may expand the availability of flow-through share financing for early-stage exploration.\

• Strengthened support for recycling initiatives: The 2025 federal budget confirms the CTM ITC will continue to apply to equipment used for recycling eligible minerals. Adding minerals that are often recovered from electronic waste and industrial byproducts may encourage businesses to invest in recycling facilities or expand existing ones.

• Clear timelines for planning capital projects: With CTM ITC eligibility tied to property available for use after Nov. 4, 2025 and before Jan. 1, 2035—and CMETC eligibility applying to flow-through share agreements until March 31, 2027—businesses planning capital costs or exploration financing should carefully assess timelines to maximize incentives.

Details of the credits

The CTM ITC is designed to accelerate investment in clean technology supply chains. It provides a 30 per cent refundable credit on the capital cost of eligible machinery and equipment acquired and available for use between 2024 and 2031.

The credit, first announced in the 2023 federal budget, will be phased out by 2035.

Eligible machinery and equipment includes those used to manufacture renewable energy technologies—such as solar, wind, water or geothermal systems—or to extract and process specified critical minerals like lithium, cobalt, nickel, graphite, copper, rare earth elements.

The CMETC is a non-refundable tax credit equal to 30 per cent of specified mineral exploration expenses incurred in Canada. It is available to shareholders who own flow-through shares of a company engaged in eligible mineral exploration activities.

Flow-through shares are permitted in certain resource sectors to incentivize investment by allowing qualifying companies to transfer expenses to shareholders decreasing the shareholders’ taxable income. To qualify, flow-through share agreements must be entered into before March 31, 2027.

Together, these measures aim to accelerate clean technology supply chains and strengthen the competitiveness of projects across the sector.

Changes to the credits

The 2025 federal budget expanded the CTM ITC mineral list to include the five aforementioned minerals to broaden the range of extraction, processing and recycling activities that can qualify for funding.

This supports Canada’s efforts to advance polymetallic extraction and processing, an area highlighted in the budget as increasingly important for clean tech supply chains.

The structure of the credit itself is unchanged; the only modification is the expanded mineral list that determines which activities fall within its scope.

As for the CMETC, the budget’s expanded mineral list could broaden the range of projects eligible for enhanced flow-through financing.

These changes apply to flow-through share agreements entered after Nov. 4, 2025 and before March 31, 2027, which gives issuers and investors a defined window to structure financings and plan exploration programs.