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

Regulations are current to 2014-10-27 and last amended on 2014-06-19. 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).