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

Regulations are current to 2016-08-01 and last amended on 2016-06-22. Previous Versions

Mining Exploration Depletion

  •  (1) In computing a taxpayer’s income for a taxation year there may be deducted such amount as he may claim not exceeding the lesser of

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

      • (i) the aggregate of

        • (A) 25 per cent of his income for the year, computed in accordance with Part I of the Act without reference to paragraph 59(3.3)(f) thereof and on the assumption that no deduction were allowed under section 65 thereof, and

        • (B) the amount, if any, included in computing his income for the year by virtue of paragraph 59(3.3)(f) of the Act

      exceeds

      • (ii) the aggregate of amounts deducted under sections 1201, 1202, 1207 and 1212 in computing his income for the year; and

    • (b) his mining exploration depletion base as of the end of the year (before making any deduction under this subsection for the year).

  • (2) For the purposes of this section, mining exploration depletion base of a taxpayer as of a particular time means the amount by which the aggregate of

    • (a) 33 1/3 per cent of the amount by which

      • (i) the aggregate of all amounts each of which was the stated percentage of an expenditure that is, or but for paragraph 66(12.61)(b) of the Act would be, incurred by the taxpayer after April 19, 1983 and before the particular time and each of which was a Canadian exploration expense

        • (A) described in subparagraph 66.1(6) (a)(iii) of the Act, or

        • (B) that would have been described in subparagraph 66.1(6) (a)(iv) or (v) of the Act if the references in those subparagraphs to “any of subparagraphs (i) to (iii.1)” were read as “subparagraph (iii)”,

        other than an expense described in clause (A) or (B) that was

        • (C) an expense renounced by the taxpayer under subsection 66(10.1) or (12.6) of the Act,

        • (D) an amount that was a Canadian exploration and development overhead expense of the taxpayer,

        • (E) an amount that was in respect of financing, including any cost incurred prior to the commencement of carrying on a business, or

        • (F) an eligible expense within the meaning of the Canadian Exploration Incentive Program Act in respect of which the taxpayer, a partnership of which the taxpayer was a member or a principal-business corporation of which the taxpayer was a shareholder, has received, is deemed to have received, is entitled to receive or may reasonably be expected to receive at any time an incentive under that Act,

      exceeds

      • (ii) the aggregate of all amounts each of which is the stated percentage of an amount of assistance (within the meaning assigned by paragraph 66(15)(a.1) of the Act) that any person has received, is entitled to receive or, at any time, becomes entitled to receive in respect of an expense that would be described in subparagraph (i) if that subparagraph were read without reference to clause (C) thereof, other than such an amount in respect of an expense renounced under subsection 66(10.1) or (12.6) of the Act

        • (A) by a corporation in favour of the taxpayer, where the amount of that assistance is excluded from the aggregate in respect of which the expense is so renounced, or

        • (B) by the taxpayer, where the amount of that assistance is not excluded from the aggregate in respect of which the expense is so renounced, and

    • (b) where the taxpayer is a successor corporation, any amount required by paragraph (3)(a) to be added before the particular time in computing the taxpayer’s mining exploration depletion base

    exceeds the aggregate of

    • (c) all amounts each of which is an amount deducted by the taxpayer under subsection (1) in computing his income for a taxation year ending before the particular time; and

    • (d) where the taxpayer is a predecessor, all amounts required by paragraph (3)(b) to be deducted before the particular time in computing the taxpayer’s mining exploration depletion base.

  • (3) Subject to subsections 1202(5) and (6), where a corporation (in this section referred to as the “successor corporation”) has at any time (in this subsection referred to as the “time of acquisition”) after April 19, 1983 and in a taxation year (in this subsection referred to as the “transaction year”) acquired a property from another person (in this subsection referred to as the “predecessor”), the following rules apply:

    • (a) for the purpose of computing the mining exploration depletion base of the successor corporation as of any time after the time of acquisition, there shall be added an amount equal to the amount required by paragraph (b) to be deducted in computing the mining exploration depletion base of the predecessor; and

    • (b) for the purpose of computing the mining exploration depletion base of the predecessor as of any time after the transaction year of the predecessor, there shall be deducted the amount, if any, by which

      • (i) the mining exploration depletion base of the predecessor immediately after the time of acquisition (assuming for this purpose that, in the case of an acquisition as a result of an amalgamation described in section 87 of the Act, the predecessor existed after the time of acquisition and no property was acquired or disposed of in the course of the amalgamation)

      exceeds

      • (ii) the amount, if any, deducted under subsection (1) in computing the income of the predecessor for the transaction year of the predecessor.

  • (3.1) [Repealed, SOR/91-79, s. 4]

  • (4) For greater certainty, where an expense incurred before a particular time is included in the aggregate calculated under subparagraph (2)(a)(i) in respect of a taxpayer and subsequent to the particular time any person becomes entitled to receive an amount of assistance (within the meaning assigned by paragraph 66(15)(a.1) of the Act) that is included in the aggregate calculated under subparagraph (2)(a)(ii), the stated percentage of the amount of assistance shall be included in the amounts referred to in subparagraph (2)(a)(ii) in respect of the taxpayer at the time the expense was incurred.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-974, s. 4;
  • SOR/85-174, s. 4;
  • SOR/85-696, ss. 2, 4;
  • SOR/90-113, s. 2;
  • SOR/90-733, s. 2;
  • SOR/91-79, s. 4;
  • SOR/94-686, ss. 78(F), 79(F).

Resource Profits

  •  (1) For the purposes of this Part, gross resource profits of a taxpayer for a taxation year means the amount, if any, by which the total of

    • (a) the amount, if any, by which the aggregate of

      • (i) the aggregate of amounts, if any, that would be included in computing the taxpayer’s income for the year by virtue of subsection 59(2) and paragraphs 59(3.2)(b) and 59.1(b) of the Act if subsection 59(2) were read without reference to subsection 64(1) therein, and

      • (i.1) the amount, if any, by which the amount included in computing his income for the year by virtue of paragraph 59(3.2)(c) of the Act exceeds the proceeds of disposition of property described in clause 66(15)(c)(ii)(A) of the Act that became receivable in the year or a preceding taxation year and after December 31, 1982 to the extent that such proceeds have not been deducted in determining the amount under this subparagraph for a preceding taxation year

      exceeds

      • (ii) the aggregate of amounts, if any, deducted in computing his income for the year by virtue of paragraph 59.1(a) and subsections 64(1.1) and (1.2) of the Act,

    • (b) the amount, if any, of the aggregate of his incomes for the year from

      • (i) the production of petroleum, natural gas, related hydrocarbons or sulphur from

        • (A) oil or gas wells in Canada operated by the taxpayer, or

        • (B) natural accumulations (other than mineral resources) of petroleum or natural gas in Canada operated by the taxpayer,

      • (ii) the production and processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources in Canada operated by him to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources in Canada operated by him to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources in Canada operated by him to any stage that is not beyond the crude oil stage or its equivalent,

      • (iii) the processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources in Canada not operated by him to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources in Canada not operated by him to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources in Canada not operated by him to any stage that is not beyond the crude oil stage or its equivalent,

      • (iv) the processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources outside Canada to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources outside Canada to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources outside Canada to any stage that is not beyond the crude oil stage or its equivalent,

      • (v) the processing in Canada of heavy crude oil recovered from an oil or gas well in Canada to any stage that is not beyond the crude oil stage or its equivalent, and

      • (vi) Canadian field processing,

    • (b.1) the total of all amounts (other than an amount included because of paragraph (b) in computing the taxpayer’s gross resource profits for the year) each of which is an amount included in computing the taxpayer’s income for the year as a rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, an oil or gas well in Canada or a mineral resource in Canada, and

    • (c) if the taxpayer owns all the issued and outstanding shares of the capital stock of a railway company throughout the year, the amount that may reasonably be considered to be the railway company’s income for its taxation year ending in the year from the transportation of such of the taxpayer’s ore as is described in clause (b)(ii)(A), (B) or (C),

    exceeds the aggregate of the taxpayer’s losses for the year from the sources described in paragraph (b), where the taxpayer’s incomes and losses are computed in accordance with the Act on the assumption that the taxpayer had during the year no incomes or losses except from those sources and was allowed no deductions in computing the taxpayer’s income for the year other than

    • (d) amounts deductible under section 66 of the Act (other than amounts in respect of foreign exploration and development expenses) or subsection 17(2) or (6) or section 29 of the Income Tax Application Rules, for the year;

    • (e) the amounts deductible or deducted, as the case may be, under section 66.1, 66.2 (other than an amount that is in respect of a property described in clause 66(15)(c)(ii)(A) of the Act), 66.4, 66.5 or 66.7 (other than subsection (2) thereof) of the Act for the year; and

    • (f) any other deductions for the year that can reasonably be regarded as applicable to the sources of income described in paragraph (b) or (b.1), other than a deduction under paragraph 20(1)(ss) or (tt) of the Act or section 1201 or subsection 1202(2), 1203(1), 1207(1) or 1212(1).

  • (1.1) For the purposes of this Part, resource profits of a taxpayer for a taxation year means the amount, if any, by which the taxpayer’s gross resource profits for the year exceeds the total of

    • (a) all amounts deducted in computing the taxpayer’s income for the year other than

      • (i) an amount deducted in computing the taxpayer’s gross resource profits for the year,

      • (ii) an amount deducted under any of section 8, paragraphs 20(1)(ss) and (tt), sections 60 to 64 and subsections 66(4), 66.7(2) and 104(6) and (12) of the Act and section 1201 and subsections 1202(2), 1203(1), 1207(1) and 1212(1) in computing the taxpayer’s income for the year,

      • (iii) an amount deducted under section 66.2 of the Act in computing the taxpayer’s income for the year, to the extent that it is attributable to any right, licence or privilege to store underground petroleum, natural gas or related hydrocarbons in Canada,

      • (iv) an amount deducted in computing the taxpayer’s income for the year from a business, or other source, that does not include any resource activity of the taxpayer, and

      • (v) an amount deducted in computing the taxpayer’s income for the year, to the extent that the amount

        • (A) relates to an activity

          • (I) that is not a resource activity of the taxpayer, and

          • (II) that is

            1. the production, processing, manufacturing, distribution, marketing, transportation or sale of any property,

            2. carried out for the purpose of earning income from property, or

            3. the rendering of a service by the taxpayer to another person for the purpose of earning income of the taxpayer, and

        • (B) does not relate to a resource activity of the taxpayer,

    • (b) all amounts each of which is the amount, if any, by which

      • (i) the amount that would have been charged to the taxpayer by a person or partnership with whom the taxpayer was not dealing at arm’s length if the taxpayer and that person or partnership had been dealing at arm’s length

        • (A) for the use after March 6, 1996 and in the year of a property (other than money) owned by that person or partnership, or

        • (B) for the provision after March 6, 1996 and in the year by that person or partnership of a service to the taxpayer

      exceeds the total of

      • (ii) the amount charged to the taxpayer for the use of that property or the provision of that service in that period, and

      • (iii) the portion of the amount described in subparagraph (i) that, if it had been charged, would not have been deductible in computing the taxpayer’s resource profits, and

    • (c) where the year ends after February 21, 1994, all amounts added under subsection 80(13) of the Act in computing the taxpayer’s gross resource profits for the year.

  • (1.2) For the purposes of paragraph (1.1)(b) and this subsection,

    • (a) a taxpayer is considered not to deal at arm’s length with a partnership where the taxpayer does not deal at arm’s length with any member of the partnership;

    • (b) a partnership is considered not to deal at arm’s length with another partnership where any member of the first partnership does not deal at arm’s length with any member of the second partnership;

    • (c) where a taxpayer is a member, or is deemed by this paragraph to be a member, of a partnership that is a member of another partnership, the taxpayer is deemed to be a member of the other partnership; and

    • (d) the provision of a service to a taxpayer does not include the provision of a service by an individual in the individual’s capacity as an employee of the taxpayer.

  • (2) For greater certainty, for the purposes of this section, in computing the income or loss of a trust for a taxation year from the sources described in paragraphs (1)(b) and (b.1), no deduction shall be made in respect of amounts deductible by the trust pursuant to subsection 104(6) or (12) of the Act.

  • (3) A taxpayer’s income or loss from a source described in paragraph (1)(b) does not include

    • (a) any income or loss derived from transporting, transmitting or processing (other than processing described in clause (1)(b)(ii)(C), (iii)(C) or (iv)(C) or subparagraph (1)(b)(v) or (vi)) petroleum, natural gas or related hydrocarbons or sulphur from a natural accumulation of petroleum or natural gas;

    • (b) any income or loss arising because of the application of paragraph 12(1)(z.1) or (z.2) or section 107.3 of the Act; and

    • (c) any income or loss that can reasonably be attributable to a service rendered by the taxpayer (other than processing described in subparagraph (1)(b)(iii), (iv), (v) or (vi) or activities carried out by the taxpayer as a coal mine operator).

  • (4) and (5) [Repealed, SOR/2007-19, s. 3]

  • (6) [Repealed, SOR/96-451, s. 2]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-502, s. 5;
  • SOR/79-245, s. 3;
  • SOR/80-132, s. 1;
  • SOR/81-158, s. 1;
  • SOR/81-974, s. 5;
  • SOR/85-174, s. 5;
  • SOR/90-113, s. 3;
  • SOR/91-79, s. 5;
  • SOR/94-686, s. 48;
  • SOR/96-451, s. 2;
  • SOR/99-179, s. 6;
  • SOR/2007-19, s. 3.
 
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