Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2014-11-11 and last amended on 2014-06-19. Previous Versions

Resource Income

  •  (1) Where a corporation has resource activities for a taxation year the following rules apply, except as otherwise provided in section 5204:

    “adjusted business income”

    “adjusted business income” of the corporation for the year means the amount, if any, by which

    • (a) the amount otherwise determined under section 5202 to be the adjusted business income of the corporation for the year

    exceeds the total of

    • (b) the amount, if any, by which the corporation’s net resource income for the year exceeds the corporation’s net resource adjustment for the year, and

    • (c) all amounts each of which is an amount in respect of refund interest included in computing the taxpayer’s income for the year, to the extent that the amount is included in the amount determined to be the adjusted business income, within the meaning of section 5202, of the corporation for the year; (revenue rajusté d’une entreprise)

    • (d) [Repealed, SOR/2007-19, s. 7]

    “cost of capital”

    “cost of capital” of the corporation for the year means the amount, if any, by which

    • (a) the amount otherwise determined under section 5202 to be the cost of capital of the corporation for the year

    exceeds

    • (b) that portion of the gross cost of property or rental cost for the use of property included in computing the cost of capital of the corporation for the year that reflects the extent to which the property was used by the corporation during the year,

      • (i) in activities engaged in for the purpose of earning Canadian resource profits of the corporation, or

      • (ii) in activities referred to in subparagraph 66(15)(b)(i), (ii) or (v), subparagraph 66(15)(e)(i) or (ii), subparagraph 66.1(6)(a)(i), (ii), (iii) or (v) or subparagraph 66.2(5)(a)(i), (ii) or (v) of the Act; (coût en capital)

    “cost of labour”

    “cost of labour” of the corporation for the year means the amount, if any, by which

    • (a) the amount otherwise determined under section 5202 to be the cost of labour of the corporation for the year

    exceeds

    • (b) that portion of the salaries and wages and other amounts included in computing the cost of labour of the corporation for the year that,

      • (i) was related to the activities engaged in for the purpose of earning Canadian resource profits of the corporation, or

      • (ii) was included in the Canadian exploration and development expenses, foreign exploration and development expenses, Canadian exploration expense or Canadian development expense, within the meanings assigned by paragraphs 66(15)(b) and (e), 66.1(6)(a) and 66.2(5)(a) of the Act respectively, of the corporation. (coût en main-d’oeuvre)

  • (2) For the purposes of subsection (1), a corporation has “resource activities” for a taxation year if

    • (a) in computing its income for the year, an amount is deductible pursuant to any of sections 65 to 66.2 of the Act;

    • (b) the corporation was at any time during the year engaged in activities for the purpose of earning resource profits of the corporation; or

    • (c) in computing the corporation’s income for the year, an amount was included pursuant to section 59 of the Act.

  • (3) In subsection (1), “net resource income” of a corporation for a taxation year means the amount, if any, by which the total of

    • (a) the resource profits of the corporation for the year, and

    • (b) the amount, if any, by which

      • (i) the total of amounts included in computing the income of the corporation for the year, from an active business carried on in Canada, pursuant to section 59 of the Act (other than amounts that may reasonably be regarded as having been included in computing the resource profits of the corporation for the year),

      exceeds

      • (ii) the total of amounts deducted in computing the income of the corporation for the year under section 64 of the Act, as that section applies with respect to dispositions occurring before November 13, 1981 and to dispositions occurring after November 12, 1981 pursuant to the terms in existence on that date of an offer or agreement in writing made or entered into on or before that date, except those amounts that may reasonably be regarded as having been deducted in computing the resource profits of the corporation for the year,

    exceeds the total of

    • (c) the total of amounts deducted in computing the income of the corporation for the year under section 65 of the Act (other than amounts that may reasonably be regarded as having been deducted in computing the resource profits of the corporation for the year), and

    • (d) the specified percentage for the year of the amount, if any, by which

      • (i) the corporation’s resource profits for the year

      exceeds the total of

      • (ii) the corporation’s Canadian resource profits for the year, and

      • (iii) the earned depletion base (within the meaning assigned by subsection 1205(1)) of the corporation at the beginning of its immediately following taxation year.

  • (3.1) In subsection (1), the net resource adjustment of a corporation for a taxation year is the amount determined by the formula

    A - B

    where

    A 
    is the amount of Canadian resource profits of the corporation for the year, and
    B 
    is the amount that would be the Canadian resource profits of the corporation for the year if
    • (a) subsections 1204(1) and (1.1) provided for the computation of negative amounts where the amounts subtracted in computing gross resource profits (as defined by subsection 1204(1)) and resource profits " exceed the amounts added in computing those amounts, and

    • (b) paragraph 1206(3)(a) applied so that a negative amount of resource profits of a partnership for a fiscal period that ended in the year were, to the extent of the corporation’s share thereof, deducted in computing the corporation’s resource profits for the year.

  • (4) For the purpose of subsection (1), “refund interest” means an amount that is received, or that becomes receivable, after March 6, 1996 from an authority (including a government or municipality) situated in Canada as a consequence of the overpayment of a tax that was not deductible under the Act in computing any taxpayer’s income and that was imposed by an Act of Canada or a province or a bylaw of a municipality.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-377, s. 13;
  • SOR/94-169, s. 7;
  • SOR/94-686, ss. 79(F), 80(F);
  • SOR/96-451, s. 7;
  • SOR/99-179, s. 11;
  • SOR/2007-19, s. 7.