Income Tax Regulations
SCHEDULE VI(Sections 1100 and 1101)Capital Cost Allowances, Timber Limits and Cutting Rights
1 For the purposes of paragraph 1100(1)(e), the amount that may be deducted in computing the income of a taxpayer for a taxation year in respect of the capital cost to him of a property, other than a timber resource property, that is a timber limit or a right to cut timber from a limit is the lesser of
(a) the aggregate of
(i) an amount computed on the basis of a rate (determined under section 2 or 3 of this Schedule) per cord, board foot or cubic metre cut in the year, and
(ii) the lesser of
(A) 1/10 of the amount expended by the taxpayer after the commencement of his 1949 taxation year that is included in the capital cost to him of the timber limit or right, for surveys, cruises or preparation of prints, maps or plans for the purpose of obtaining a licence or right to cut timber, and
(B) the amount expended as described in clause (A) minus the aggregate of amounts deducted under this subparagraph in computing the income of the taxpayer in previous years; and
(b) the undepreciated capital cost to the taxpayer as of the end of the year (before making any deduction under section 1100 for the year) of the timber limit or right.
2 If the taxpayer has not been granted an allowance in respect of the limit or right for a previous taxation year, the rate for a taxation year is an amount determined by the formula
A(B – (C +D))/E
where
- A
- is
(a) 1.5, if the property is an accelerated investment incentive property acquired before 2024,
(b) 1.25, if the property is an accelerated investment incentive property acquired after 2023, and
(c) 1, in any other case;
- B
- is the capital cost of the mine or right to the taxpayer;
- C
- is the residual value of the timber limit;
- D
- is the total of all amounts expended by the taxpayer after the commencement of the taxpayer’s 1949 taxation year that are included in the capital cost to the taxpayer of the timber limit or right, for surveys, cruises or preparation of prints, maps or plans for the purpose of obtaining a licence or right to cut timber; and
- E
- is the quantity of timber in the limit or the quantity of timber the taxpayer has obtained a right to cut, as the case may be, (expressed in cords, board feet or cubic metres) as shown by a cruise.
3 If the taxpayer has been granted an allowance in respect of the limit or right in a previous taxation year, the rate for a taxation year is
(a) if paragraph (b) does not apply,
(i) if section 2 applied in the previous year to determine the rate employed to determine the allowance for the year, the rate that would have been determined under section 2 if paragraph (c) of the description of A in that section applied, and
(ii) in any other case, the rate employed to determine the allowance for the most recent year for which an allowance was granted; and
(b) where it has been established that the quantity of timber that was in the limit or that the taxpayer had a right to cut was in fact substantially different from the quantity that was employed in determining the rate for the previous year referred to in paragraph (a), or where it has been established that the capital cost of the limit or right is substantially different from the amount that was employed in determining the rate for that previous year, a rate determined by dividing
(i) the amount that would be the undepreciated capital cost to the taxpayer of the limit or right as of the commencement of the year if paragraph (c) of the description of A in section 2 had applied in respect of each previous taxation year, minus the residual value,
by
(ii) the estimated remaining quantity of timber that is in the limit or that the taxpayer has a right to cut, as the case may be, (expressed in cords, board feet or cubic metres) at the commencement of the year.
4 In lieu of the deduction otherwise determined under this Schedule, a taxpayer may elect that the deduction for a taxation year be the lesser of
(a) $100; and
(b) the amount received by him in the taxation year from the sale of timber.
5 In this Schedule, residual value means the estimated value of the property if the merchantable timber were removed.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- SOR/86-1092, s. 24(F)
- SOR/94-140, ss. 32 to 34
- 2019, c. 29, s. 68
- 2019, c. 29, s. 69
- Date modified: