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

Regulations are current to 2017-09-27 and last amended on 2017-07-01. Previous Versions

Qualified Construction Equipment

 For the purposes of the definition qualified construction equipment in subsection 127(9) of the Act, prescribed equipment means depreciable property of a taxpayer, other than qualified property as defined by subsection 127(9) of the Act or qualified transportation equipment as defined by subsection 127(9) of the Act, that is

  • (a) a property included in Class 22 or 38 in Schedule II;

  • (b) a crane;

  • (c) a pile driver; or

  • (d) a dredge.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/85-696, s. 13;
  • SOR/88-165, s. 22;
  • SOR/90-22, s. 8.

Approved Project Property

  •  (1) For the purposes of paragraphs (a) and (c) of the definition approved project property in subsection 127(9) of the Act, property is a prescribed building if it is depreciable property of the taxpayer that is a building or grain elevator, erected on land owned or leased by the taxpayer,

    • (a) that is included in Class 1, 3, 6, 24, 27 or 37 or paragraph (c), (d) or (e) of Class 8 in Schedule II; or

    • (b) that is included or would, but for Class 28 or Class 41 in Schedule II, be included in paragraph (g) of Class 10 in Schedule II.

  • (2) For the purposes of paragraphs (b) and (d) of the definition approved project property in subsection 127(9) of the Act, property is prescribed machinery and equipment if it is depreciable property of the taxpayer (other than property referred to in subsection (1)) that is

    • (a) a property included in paragraph (k) of Class 1 or paragraph (a) of Class 2 in Schedule II;

    • (b) an oil or water storage tank;

    • (c) a property included in Class 8 in Schedule II (other than railway rolling stock);

    • (d) subject to paragraph (e), a property included in paragraph (a) of Class 10 or Class 22 or 38 in Schedule II (other than a car or truck designed for use on highways or streets);

    • (e) a logging truck acquired to be used in the activity of logging and having a weight, including the weight of property the capital cost of which is included in the capital cost of the truck at the time of its acquisition (but for greater certainty not including the weight of fuel), in excess of 16,000 pounds;

    • (f) a property included in any of paragraphs (b) to (f), (h) to (k), (o), (q), (r), (t) or (u) of Class 10 in Schedule II;

    • (g) a property included in paragraph (n) of Class 10, or Class 15, in Schedule II (other than a roadway);

    • (h) a property included in any of paragraphs (a) to (f) of Class 9 in Schedule II;

    • (i) a property included in Class 28 or 41 in Schedule II that would, but for that classes, be included in paragraph (k) or (r) of Class 10 in Schedule II;

    • (j) a property included in any of Classes 21, 24, 27, 29, 34, 39, 40 and 43 in Schedule II;

    • (k) a property included in Class 37 in Schedule II; or

    • (l) a vessel (other than a supply boat, workboat, drilling rig, workover rig or shuttle tanker), including the furniture, fittings and equipment attached thereto, that is used primarily for

      • (i) heavy-lifting or pipe-laying in the construction of, or

      • (ii) the provision of lodging services in the servicing of,

      an installation, structure, apparatus or artificial island that is used for offshore hydrocarbon exploration or exploitation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/86-1136, s. 7;
  • SOR/90-22, s. 9;
  • SOR/94-169, s. 4.

Prescribed Activities

 For the purposes of the definition for an approved purpose in paragraph (e) of the definition approved project property in subsection 127(9) of the Act, a prescribed activity of a taxpayer is

  • (a) operating a hotel, motel, camping ground, travel trailer park or any similar lodging facility;

  • (b) providing facilities that are ancillary to a lodging facility referred to in paragraph (a) that is owned by the taxpayer and that are intended for the use and enjoyment of the occupants of the lodging facility;

  • (c) providing facilities that are primarily for the receiving, storage and distribution of goods owned by persons with whom the taxpayer deals at arm’s length;

  • (d) providing to a business owned by a person with whom the taxpayer deals at arm’s length

    • (i) engineering or architectural services,

    • (ii) computer services, or

    • (iii) other technical or scientific services,

    but not including financial, legal, accounting, medical or dental services;

  • (e) providing to a business owned by a person with whom the taxpayer deals at arm’s length

    • (i) the services of an employment agency, or

    • (ii) advertising services, other than advertising services in a medium owned by the taxpayer; or

  • (f) operating a vessel described in paragraph 4604(2)(l).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/86-1136, s. 7.

Prescribed Amount

 For the purposes of paragraph (b) of the definition contract payment in subsection 127(9) of the Act, a prescribed amount is an amount received from the Canadian Commercial Corporation in respect of an amount received by that Corporation from a government, municipality or other public authority other than the government of Canada or of a province, a Canadian municipality or other Canadian public authority.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/86-1136, s. 7;
  • SOR/94-686, s. 24(F).

Prescribed Designated Regions

 For the purposes of the definition specified percentage in subsection 127(9) of the Act, prescribed designated region means a region of Canada, other than the Gaspé peninsula and the provinces of Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland, including Labrador, that was a designated region on December 31, 1984, under the Regional Development Incentives Designated Region Order, 1974.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 23.

Prescribed Expenditure for Qualified Canadian Exploration Expenditure

  •  (1) In this section,

    joint exploration corporation

    joint exploration corporation has the meaning assigned by paragraph 66(15)(g) of the Act; (société d’exploration en commun)

    principal-business corporation

    principal-business corporation has the meaning assigned by paragraph 66(15)(h) of the Act; (société exploitant une entreprise principale)

    shareholder corporation

    shareholder corporation has the meaning assigned by paragraph 66(15)(i) of the Act; (société actionnaire)

    well

    well means an exploratory probe or an oil or gas well. (puits)

  • (2) For the purposes of the definition qualified Canadian exploration expenditure in subsection 127(9) of the Act, the prescribed expenditure of a taxpayer for a taxation year is the aggregate of all amounts each of which is the amount, if any, by which

    • (a) the specified expenses of the taxpayer for the year in respect of the well

    exceed

    • (b) the base amount of the taxpayer at the end of the year in respect of the well.

  • (3) For the purposes of this section, the specified expenses of a taxpayer for a taxation year in respect of a well that is an exploratory probe is the aggregate of all expenses that

    • (a) would be Canadian exploration expenses of the taxpayer by reason of any of subparagraphs 66.1(6)(a)(i), (iv) and (v) of the Act if the references in subparagraphs 66.1(6)(a)(iv) and (v) of the Act (as those subparagraphs read on November 30, 1985) to “any of subparagraphs (i) to (iii.1)” were read as references to “subparagraph (i)”;

    • (b) were incurred

      • (i) in the year, and

      • (ii) after November 1985 and before 1991;

    • (c) were incurred in the drilling or completing of the exploratory probe or in building a temporary access road to, or preparing the site in respect of, the probe; and

    • (d) are not non-qualifying expenses of the taxpayer.

  • (4) For the purposes of this section, the specified expenses of a taxpayer for a taxation year in respect of a well that is an oil or gas well is the aggregate of all expenses that

    • (a) would be Canadian exploration expenses of the taxpayer by virtue of any of subparagraphs 66.1(6)(a)(ii) to (ii.2), (iv) and (v) of the Act if the references in subparagraphs 66.1(6)(a)(iv) and (v) of the Act (as those subparagraphs read on November 30, 1985) to “subparagraphs (i) to (iii.1)” were read as references to “subparagraphs (ii) to (ii.2)”;

    • (b) were incurred in respect of the well

      • (i) in the year, and

      • (ii) after November 1985 and before 1991; and

    • (c) are not non-qualifying expenses of the taxpayer.

  • (5) For the purposes of subsections (3) and (4), a non-qualifying expense of a taxpayer is an expense that

    • (a) may reasonably be regarded as having been incurred as consideration for services to be rendered after 1990 or for property that cannot reasonably be considered to be for use by the taxpayer before 1991;

    • (b) was or is to be renounced by the taxpayer at any time under subsection 66(10.1) or (12.6) of the Act;

    • (c) is or was a Canadian exploration and development overhead expense, within the meaning of section 1206, of the taxpayer, of a partnership of which the taxpayer was a member or of a joint exploration corporation of which the taxpayer was a shareholder corporation;

    • (d) is an eligible cost or expense within the meaning of the Petroleum Incentives Program Act or the Petroleum Incentives Program Act, Chapter P-4.1 of the Statutes of Alberta, 1981, in respect of which, or in respect of part of which, the taxpayer, a partnership of which the taxpayer was a member, a joint exploration corporation of which the taxpayer was a shareholder corporation 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 an incentive under either of those Acts; or

    • (e) was included in determining the specified expenses of any other taxpayer for a taxation year.

  • (6) For the purposes of this section, the base amount of a taxpayer at the end of a particular taxation year in respect of a well is the amount, if any, by which the taxpayer’s threshold amount in respect of the well exceeds the aggregate of

    • (a) all amounts that would have been the taxpayer’s specified expenses for any taxation year in respect of the well if

      • (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and

      • (ii) subsection (5) were read without reference to paragraph (d) thereof;

    • (b) all amounts referred to in paragraph (5)(d) for the particular taxation year or a preceding taxation year in respect of the well that would have been included in determining the taxpayer’s specified expenses for the particular taxation year or the preceding taxation year but for that paragraph; and

    • (c) all amounts that are the taxpayer’s specified expenses for any preceding taxation year in respect of the well.

  • (7) For the purposes of this section, the threshold amount of a taxpayer in respect of a well is

    • (a) where no agreement has been filed with the Minister under subsection (8) in respect of the well, $5,000,000; and

    • (b) where an agreement has been filed with the Minister under subsection (8) in respect of the well, the amount, if any, allocated to the taxpayer under the agreement.

  • (8) For the purposes of this section, where the aggregate of all expenses in respect of a well, each of which

    • (a) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if subsection (5) were read without reference to paragraph (d) thereof, or

    • (b) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if

      • (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and

      • (ii) subsection (5) were read without reference to paragraph (d) thereof,

    exceeds $5,000,000, all taxpayers who have incurred those expenses or in whose favour or to whom any of those expenses have been renounced under subsection 66(10.1) or (12.6) of the Act may file with the Minister an agreement in writing in the prescribed form in respect of the well allocating amounts to some or all of those taxpayers if

    • (c) the amount allocated to each taxpayer does not exceed the total of such expenses that were incurred by the taxpayer in respect of the well, and that are not to be renounced by the taxpayer under subsection 66(10.1) or (12.6) of the Act in favour of or to any other person, and

    • (d) the aggregate of all amounts so allocated is not less than $5,000,000.

  • (9) For the purposes of this section, where

    • (a) the drilling of a well (in this subsection referred to as the “abandoned well”) is abandoned not because of the results obtained but because of geological or mechanical difficulties and the drilling of a new well (in this subsection referred to as the “new well”) is commenced, and

    • (b) having regard to all the circumstances, including the lapse of time between the abandonment of the abandoned well and the commencement of the new well and the proximity of the sites of the wells, it is reasonable to regard the new well as a replacement for the abandoned well,

    the abandoned well and the new well shall be deemed to be one well.

  • (10) For the purpose of this section, where an expense of a joint exploration corporation is deemed by subsection 66(10.1) or (10.2) of the Act to be an expense of a shareholder corporation of the joint exploration corporation, the shareholder corporation shall be deemed to have incurred the expense at the time it was incurred by the joint exploration corporation.

  • (11) For the purpose of this section, where an expense of a principal-business corporation is deemed by subsection 66(12.61) or (12.63) of the Act to be an expense of a shareholder of the corporation, the shareholder shall be deemed to have incurred the expense at the time it was incurred by the principal-business corporation.

  • (12) For the purposes of this section, where an expense incurred by a partnership is, under subparagraph 66.1(6)(a)(iv) of the Act, a Canadian exploration expense of a taxpayer who was a member of the partnership, the taxpayer shall be deemed to have incurred the Canadian exploration expense at the time the expense was incurred by the partnership.

  • (13) For the purposes of this section, where an expense is a Canadian development expense of a taxpayer that is, under subsection 66.1(9) of the Act, deemed to be a Canadian exploration expense of the taxpayer, the taxpayer shall be deemed to have incurred the Canadian exploration expense at the time the Canadian development expense was incurred.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/89-463, s. 1;
  • SOR/92-681, s. 3;
  • SOR/94-686, ss. 58(F), 78(F), 79(F).
 
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