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Petroleum and Gas Revenue Tax Act (R.S.C., 1985, c. P-12)

Act current to 2022-07-13 and last amended on 2005-12-12. Previous Versions

Petroleum and Gas Revenue Tax Act

R.S.C., 1985, c. P-12

An Act to provide for a revenue tax in respect of petroleum and gas

Short Title

Marginal note:Short title

 This Act may be cited as the Petroleum and Gas Revenue Tax Act.

  • 1980-81-82-83, c. 68, s. 78

Interpretation and Application

Marginal note:Definitions

  •  (1) In this Act,

    approved recovery project

    approved recovery project means

    • (a) a project certified in writing by the Minister of Natural Resources to have commenced operations after March 31, 1985 and to be a water-flood or a major expansion to a water-flood,

    • (b) a prescribed project certified in writing by the Minister of Natural Resources to have commenced operations after 1982, or

    • (c) a project certified in writing by the Minister of Finance and the Minister of Natural Resources as a major energy project that commenced operations after March 31, 1985; (installation approuvée de récupération)

    Crown royalty

    Crown royalty of a person for a taxation year in respect of the production in the year of petroleum or gas from a well or bituminous sands, oil sands or oil shale deposit or the ownership of a natural reservoir of gas or petroleum in Canada or a bituminous sands, oil sands or oil shale deposit in Canada means the amount, if any, by which the aggregate of the amounts,

    • (a) paid, payable or receivable as prescribed in respect of that production or ownership,

    • (b) included in computing his income for the year by virtue of paragraph 12(1)(o) of the Income Tax Act in respect of that production or ownership,

    • (c) that were not deductible in computing his income for the year by virtue of paragraph 18(1)(m) of the Income Tax Act in respect of that production or ownership,

    • (d) by which, in respect of the disposition by him of that production, his proceeds of disposition were increased by virtue of subsection 69(6) of the Income Tax Act, and

    • (e) by which, in respect of the acquisition by him of that production, his cost was reduced by virtue of subsection 69(7) of the Income Tax Act

    exceeds the aggregate of all reimbursements referred to in section 80.2 of the Income Tax Act received or receivable by him for the year in respect of that production or ownership; (redevance à la Couronne ou redevance en faveur de la Couronne)

    crude oil

    crude oil means a liquid mixture of hydrocarbons, other than heavy oil, recovered from a natural reservoir in Canada; (pétrole brut)

    deepened well

    deepened well means an oil or gas well that, after

    • (a) being capable of producing petroleum or gas from an accumulation of petroleum or gas, or

    • (b) being drilled for the purpose of producing petroleum or gas from an accumulation of petroleum or gas and having been abandoned,

    is deepened by further drilling commenced after March 31, 1985 for the purpose of producing petroleum or gas from a different accumulation of petroleum or gas; (puits approfondi de pétrole ou de gaz)

    exempt percentage

    exempt percentage, for a period in respect of an approved recovery project, means a percentage approved in writing by the Minister of Natural Resources for that period in respect of the project; (pourcentage d’exonération)

    Federal Court

    Federal Court[Repealed, R.S., 1985, c. 51 (4th Supp.), s. 16]

    gas

    gas means natural gas or any fluid hydrocarbon, other than a hydrocarbon that is a liquid in its naturally occurring state, recovered from a natural reservoir in Canada; (gaz)

    incremental Crown royalty

    incremental Crown royalty[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    incremental oil revenue

    incremental oil revenue[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    incremental payout

    incremental payout[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    incremental production royalty

    incremental production royalty[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    incremental resource royalty

    incremental resource royalty[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    Minister

    Minister means the Minister of National Revenue; (ministre)

    new deep production

    new deep production means that part of the production from a deepened well that is directly attributable to the deepening; (production nouvelle en profondeur)

    old oil

    old oil[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    old oil base price

    old oil base price[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    payout

    payout, in respect of a royalty, has the meaning assigned by subsection 26(7) or (9), whichever is applicable; (reversement)

    petroleum

    petroleum means crude oil or heavy oil recovered from a natural reservoir in Canada and any liquid or solid hydrocarbon recovered from a bituminous sands, oil sands or oil shale deposit in Canada; (pétrole)

    production revenue

    production revenue means petroleum and gas production revenue within the meaning of section 5; (revenu de production)

    production royalty

    production royalty means an amount computed by reference to the amount or value of production after December 31, 1981 of petroleum or gas, including any minimum or advance royalty payment with respect to the amount or value of production, but does not include

    • (a) a resource royalty, or

    • (b) an amount to which paragraph 7(e) applies paid to a person referred to therein; (redevance de production)

    resource royalty

    resource royalty means an amount, other than an amount to which paragraph 7(e) applies paid to a person referred to therein, computed by reference to the amount or value of production

    • (a) after December 31, 1980 and before January 1, 1982, of petroleum or gas, including any minimum or advance royalty payment with respect to the amount or value of production, or

    • (b) after December 31, 1981, of petroleum or gas, including any minimum or advance royalty payment with respect to the amount or value of such production, but not including an amount computed by reference to the amount or value of such production of petroleum or gas where

      • (i) the recipient of the amount so computed would have a Crown royalty in respect of

        • (A) such production, or

        • (B) the ownership of property to which such production relates where the Crown royalty is computed by reference to an amount of production from the property

        if the definition Crown royalty were read without reference to a taxation year and if the determination of the amount of the Crown royalty under that definition were made only in respect of such production or such ownership, or

      • (ii) the recipient of the amount so computed would, but for an exemption or allowance, other than a rate of nil, that is provided by statute by a person referred to in paragraph 7(e), have a Crown royalty determined pursuant to subparagraph (i); (redevance pétrolière)

    synthetic production

    synthetic production means the production of petroleum from a mine in a bituminous sands deposit; (production par synthèse)

    synthetic production revenue

    synthetic production revenue means that portion of production revenue that is derived from synthetic production; (revenu de production par synthèse)

    taxable incremental oil revenue

    taxable incremental oil revenue[Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 1]

    taxation year

    taxation year of a person means

    • (a) the taxation year of that person as determined for the purposes of the Income Tax Act,

    • (b) where that person has no taxation year referred to in paragraph (a), the period for which his accounts have been ordinarily made up for the purposes of assessment under this Act, or

    • (c) where neither paragraph (a) nor (b) applies in respect of the person, such taxation year as may be adopted by the person,

    but in no case shall a taxation year exceed fifty-three weeks. (année d’imposition)

  • Marginal note:Other words and expressions

    (2) All words and expressions used in this Act and not otherwise defined have, with such modifications as the circumstances require, the same meanings as in the Income Tax Act.

  • Marginal note:Trusts

    (3) A trust shall, for the purposes of this Act, and without affecting the liability of the trustee or legal representative for his own tax under this Act, be deemed to be, in respect of the trust property, an individual.

  • Marginal note:Changes in taxation year

    (4) No change in the taxation year of a person shall be made for the purposes of this Act unless the Minister consents in writing to the change.

  • Marginal note:Interpreting tax imposed

    (5) For greater certainty and notwithstanding anything in any other Act of Parliament or anything approved, made or declared to have the force of law thereunder, a tax imposed under this Act shall, for all purposes, be deemed not to be an income or profits tax, a surtax or an excess profits tax.

  • Marginal note:Associated corporations

    (6) For the purposes of this Act, one corporation is associated with another corporation in a taxation year if

    • (a) the corporations are associated with each other in the year by virtue of a direction made under subsection 247(2) of the Income Tax Act; or

    • (b) the corporations would be associated with each other in the year by virtue of section 256 of the Income Tax Act, if the references in paragraphs (1)(c) to (e) thereof to “capital stock thereof” were read as references to “capital stock thereof, or had an equity percentage (within the meaning of paragraph 95(4)(b)) in each corporation of not less than 10%”.

  • Marginal note:Deeming of association

    (7) Where, in the case of two or more corporations, the Minister is satisfied

    • (a) that

      • (i) the separate existence of the corporations in a taxation year is not solely for the purpose of carrying out the business of the corporations in the most effective manner, and

      • (ii) one of the main reasons for the separate existence in the year is to reduce the amount of tax that would be payable under this Act, or

    • (b) that the corporations have at any time entered into an agreement or transaction that lacks any substantial business purpose other than to increase the aggregate deduction from tax allowed to the corporations under subsection 10(1) in a taxation year,

    the corporations shall, if the Minister so directs, be deemed, for the purposes of this Act, to be associated with each other in the year.

  • Marginal note:Idem

    (8) Where two corporations are associated by virtue of subsection (6) or (7), or are deemed by this subsection to be associated with the same corporation at the same time, they shall, for the purposes of this Act, be deemed to be associated with each other.

  • Marginal note:Deeming of non-association

    (9) Where all the shares and rights to acquire shares of the capital stock of a corporation are owned directly or indirectly by one or more registered pension funds or plans and the corporation would, but for this subsection, be associated with another corporation in a taxation year under paragraph (6)(b) by reason that the corporations are controlled by the same trustee or trustees, the corporations shall be deemed not to be associated with each other in the year unless one of the main reasons for the separate existence of the corporations in the year is to reduce the amount of tax that would otherwise be payable under this Act.

  • Marginal note:Appeal

    (10) On an appeal from an assessment made pursuant to a direction of the Minister under subsection (7), the Tax Court of Canada may

    • (a) confirm the direction;

    • (b) vacate the direction if

      • (i) in the case of a direction under paragraph (7)(a), it determines that none of the main reasons for the separate existence of the corporations was to reduce the amount of tax payable under this Act, or

      • (ii) in the case of a direction under paragraph (7)(b), it determines that the agreement or transaction referred to in that paragraph had a substantial business purpose, other than to increase the aggregate deduction from tax allowed under subsection 10(1); or

    • (c) vary the direction and refer the matter back to the Minister for reassessment.

  • Marginal note:Certification of prescribed project

    (11) The Minister of Natural Resources shall not certify

    • (a) a project for the purposes of paragraph (a) of the definition “approved recovery project” in subsection (1) unless a request for the certification is filed with the Minister of Natural Resources within 180 days after the project commenced operations; or

    • (b) a prescribed project to have commenced operations after 1982 for the purposes of paragraph (b) of the definition “approved recovery project” in subsection (1) unless a joint election made under subsection 5(9) in respect of the project has been filed with the Minister of National Revenue in accordance with subsection 5(10).

  • Marginal note:Late-filed request

    (12) Where, in the opinion of the Minister of Natural Resources, the circumstances of a case are such that it would be just and equitable to permit a request for certification to be filed under paragraph (11)(a) after the day on or before which it is required by that paragraph to be filed, that Minister may permit the request to be filed after that day and, where the request is filed pursuant to the permission, the request shall be deemed to have been filed on the day on or before which it is required to be filed.

  • R.S., 1985, c. P-12, s. 2
  • R.S., 1985, c. 2 (2nd Supp.), s. 1, c. 51 (4th Supp.), s. 16
  • 1994, c. 41, s. 37

Marginal note:Application restricted

 This Act does not apply in respect of income or loss of a taxpayer from a source that is

  • (a) the production after September 1986 of petroleum or gas;

  • (b) the processing in Canada after September 1986 of petroleum to any stage that is not beyond the stage of crude oil or its equivalent; or

  • (c) any amount received or receivable by the taxpayer as, on account of or in lieu of payment of, or in satisfaction of, a production royalty or resource royalty computed by reference to the amount or value of production after September 1986 of petroleum or gas.

  • R.S., 1985, c. 45 (2nd Supp.), s. 1

Her Majesty

Marginal note:Binding on Her Majesty

 This Act is binding on Her Majesty in right of Canada or any province.

  • 1980-81-82-83, c. 68, s. 80
 
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