I-3, r. 1 - Regulation respecting the Taxation Act

Section 360r2 Disposition versions

2017-12-20

360R2. In this chapter,

“bituminous sands equipment” means property of a taxpayer that is included in Class 28 in Schedule B, or in Class 41 in that schedule under subparagraph a of the first paragraph of that class, and that the taxpayer acquired after 10 April 1978 mainly for the purpose of earning or producing income from one or more mines located in a deposit of bituminous sands, oil sands or oil shale from which materials are extracted, but does not include a property included in one of those classes by reason of the reference in that Class 28 to subparagraph m of the second paragraph of Class 10 in Schedule B, or where it is a property acquired before 17 November 1978 by reason of the reference, in subparagraph i of subparagraph e of the first paragraph of that Class 28, to subparagraph f of the second paragraph of that Class 10;

“Canadian exploration and development overhead expense” of a taxpayer means a taxpayer’s Canadian exploration expense or Canadian development expense that is not a Canadian renewable and conservation expense, within the meaning assigned by section 399.7R1, or a taxpayer’s share of such an expense incurred by a partnership, and that the taxpayer made or incurred after 31 December 1980

(a)  for the administration, management or financing of the taxpayer;

(b)  in respect of the remuneration and related benefits paid in respect of a person employed by the taxpayer whose duties were not all or substantially all related to exploration or development activities;

(c)  for taxes, insurance or rents in respect of, or for the maintenance of, property all or substantially all of the use of which by the taxpayer was not for the purposes of exploration or development activities; and

(d)  for the use of or the right to use any property in which any person who was connected with the taxpayer had an interest, for compensation for the performance of a service for the benefit of the taxpayer by any person who was connected with the taxpayer, or for the acquisition of any materials, parts or supplies from any person who was connected with the taxpayer, to the extent that the expense exceeds the least of amounts, each of which was the aggregate of the costs incurred by a person who was connected with the taxpayer in respect of the property, the performance of the service, or the materials, parts or supplies;

“Canadian oil and gas exploration expense” of a taxpayer means an expenditure incurred after 31 December 1980 and that would constitute a Canadian exploration expense of the taxpayer within the meaning of section 395 of the Act, except an expenditure that constitutes, under paragraph b of that section 395 where it is interpreted without taking into account the expenses incurred during the year or under subparagraph ii of paragraph b.1 of that section, a Canadian exploration expense in respect of a qualified tertiary oil recovery project, if that section were read

(a)  without reference to paragraphs c to c.5;

(b)  with “expenses described in paragraphs a to b.1 and c to c.5” in paragraph d replaced by “expenses described in paragraphs a to b.2”; and

(c)  with “an expense described in paragraphs a to c.1” in paragraph e replaced by “expenses described in paragraphs a to b.2”;

“coal mine operator” means a person who undertakes all or substantially all of the activities related to coal production from a resource;

“conventional lands” means lands located in Canada other than non-conventional lands;

“development corporation” has the meaning assigned by section 363 of the Act;

“enhanced recovery material” means property of a taxpayer that is included in Class 10 in Schedule B under subparagraph d of the second paragraph of that class and that the taxpayer acquired after 10 April 1978 and before 1 January 1981 in order to use it in the production of a volume of oil from a reservoir or a deposit of bituminous sands, oil sands or oil shale that the taxpayer operates in Canada, that is greater than the volume that could be recovered using primary recovery techniques alone, but does not include property

(a)  that the taxpayer has already used in a primary recovery process;

(b)  that a person with whom the taxpayer was not dealing at arm’s length used before the taxpayer acquired it; and

(c)  that a person used before 11 April 1978 in the production of a volume of oil obtained from a reservoir in Canada that is greater than the volume that could be recovered using primary recovery techniques alone;

“exempt partnership” in respect of a taxpayer at a particular time means a partnership of which the taxpayer was a member throughout the period beginning on 20 December 1991 and ending at the particular time, where all or substantially all of the fair market value of the property of the partnership at the particular time is attributable to property held in connection with one or more working interests that were held by the partnership on 20 December 1991 for the production of minerals, petroleum, natural gas or related hydrocarbons, unless

(a)  any of the depreciable property acquired after 20 December 1991 and before the particular time by the partnership in connection with one of the working interests had, before the time of the acquisition, been owned by the taxpayer, or any other person with whom the taxpayer did not deal at arm’s length, and been used by the taxpayer, or that other person, in connection with that working interest; or

(b)  it is reasonable to consider that, before the particular time, amounts were charged to the partnership that would not have been so charged if Chapter III of Title XVI were read without reference to 145R4;

“exporting resource”, in respect of a property of a taxpayer used for processing, means a resource from which all or part of the ore produced during the year immediately preceding the acquisition of the property by the taxpayer was ordinarily processed outside Canada to any stage that is not beyond the prime metal stage or its equivalent;

“joint exploration corporation” has the meaning assigned by section 382 of the Act;

“mine” means any location where material is extracted from a mineral resource in Canada, excluding a well for the extraction of material from a deposit of bituminous or oil sands or oil shale;

“mining business” has the meaning assigned by section 359 of the Act;

“non-conventional lands” means lands that belong to Her Majesty in right of Canada, or in respect of which Her Majesty in right of Canada has the right to dispose of or exploit the natural resources, situated in the Yukon Territory, the Northwest Territories, or Sable Island or in those submarine areas not within a province, adjacent to the coast of Canada and extending throughout the natural prolongation of the land territory of Canada to the outer edge of the continental margin or to 200 nautical miles from the baselines from which the breadth of the territorial sea of Canada is measured, whichever is the greater;

“oil business” has the meaning assigned by section 359 of the Act;

“ore” includes ore from a mineral resource that has been processed to any stage that is prior to the prime metal stage or its equivalent;

“original owner” of a property means a person

(a)  who owned the property and disposed of it to a corporation that acquired it in circumstances in which section 360R18 applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property; and

(b)  who would, but for section 360R59, as it read in its application to a taxation year ending before 18 February 1987, or paragraph a of section 360R59, as the case may be, be entitled in computing the person’s income for a taxation year ending after the person disposed of the property, to a deduction under section 360R17 in respect of expenditures that were incurred by the person before the person disposed of the property;

“predecessor owner” of a property means a corporation that

(a)  acquired the property in circumstances where, in respect of that property, section 360R18 applies to the corporation or would apply to it if it had continued to own the property;

(b)  disposed of the property to another corporation that acquired it in circumstances where, in respect of that property, section 360R18 applies to that other corporation or would apply to it if it had continued to own the property; and

(c)  would be entitled, but for section 360R19, in respect of expenditures incurred by an original owner of the property, to a deduction under section 360R18 in computing its income for a taxation year ending after the time when it disposed of the property;

“primary recovery” means the recovery of oil from a reservoir following use of the natural energy of the reservoir to bring the oil to a producing well;

“proceeds of disposition” of a property has the meaning assigned by subparagraph f of the first paragraph of section 93 of the Act;

“production” from a Canadian resource property has the meaning assigned by the second paragraph of section 418.15 of the Act;

“production royalty” means an amount, in respect of a particular Canadian resource property, included in computing the income of a taxpayer as a rental or royalty computed by reference to the amount or value of petroleum, natural gas or related hydrocarbons either produced after 31 December 1981 from a natural accumulation of petroleum or natural gas in Canada, other than a resource, or from an oil or gas well in Canada, or produced after 30 June 1988 from a resource that is a deposit of bituminous sands, oil sands or oil shale, if

(a)  the taxpayer has a Crown royalty in respect of such production or in respect of the ownership of property to which such production relates where, in the latter case, Crown royalty is computed by reference to an amount of production from the accumulation, oil or gas well or resource, and it is reasonable in all cases to consider that the taxpayer would have had the Crown royalty if the taxpayer’s only source of income had been the rental or royalty in respect of the particular Canadian resource property; or

(b)  the taxpayer would, but for an exemption or allowance, other than a rate of nil, that is provided, pursuant to a statute, by a person referred to in section 90 of the Act, have a Crown royalty in respect of which paragraph a is applicable;

“property used for processing” means property that, before it was acquired by the taxpayer, has not been used by a person with whom the taxpayer was not dealing at arm’s length and that is property included in Class 10 in Schedule B because of subparagraph a of the second paragraph of that class or that would be so included were it not for subparagraph ii of that subparagraph a and Class 41 in Schedule B, or property included in that class because of subparagraph e of that second paragraph or that would be so included were it not for subparagraph iii of that subparagraph e and Class 41 in Schedule B;

“qualified resource”, in respect of a property of a taxpayer used for processing, means a resource which, within a reasonable time after the taxpayer acquired the property, began producing in reasonable commercial quantities or was the subject of a major expansion by virtue of which the projected greatest capacity, measured according to the weight of input of ore, of the mill that processed the ore from the resource was, in the year immediately following the expansion, not less than 25% greater than it was in the year immediately preceding the expansion;

“qualified tertiary oil recovery project” in respect of an expense incurred in a taxation year means a project that uses a method, including a method that uses carbon dioxide miscible, hydrocarbon miscible, thermal or chemical processes but not including a secondary recovery method, that is designed to recover oil from an oil well in Canada that is incremental to oil that would be recovered therefrom by primary recovery and a secondary recovery method, if

(a)  a specified royalty provision applies in the year or in the immediately following taxation year in respect of the production or any portion thereof from the production or any portion thereof from the project or in respect of the ownership of property to which such production relates;

(b)  the project is on a reserve within the meaning of the Indian Act (R.S.C. 1985, c. I-5); or

(c)  the project is located in the Province of Ontario;

“reserve amount” has the meaning assigned by subparagraph a of the first paragraph of section 418.15 of the Act;

“resource” means a mineral resource in Canada;

“secondary recovery method” means a method to recover from a reservoir oil that is incremental to oil that would be recovered therefrom by primary recovery, by supplying energy, through the use of technically proven methods, including waterflooding, to supplement or replace the natural energy of the reservoir;

“shareholder corporation” has the meaning assigned by subsection 1 of section 383 of the Act, as it read before its revocation;

“specified percentage” for a calendar year in respect of a Canadian oil and gas exploration expense of a taxpayer for that year means

(a)  in respect of such an expense incurred in respect of conventional lands, 100% for the 1981 calendar year, 60% for the 1982 calendar year and 30% for the 1983 calendar year; and

(b)  in respect of such an expense incurred in respect of non-conventional lands, 100% for the 1981 and 1982 calendar years, 60% for the 1983 calendar year and 30% for the 1984 calendar year;

“specified property” of a person means all or substantially all of the property used by the person in carrying on in Canada a business described in paragraphs a to g of section 363 of the Act;

“specified royalty” means a royalty created after 5 December 1996, otherwise than in accordance with an agreement in writing entered into on or before that date, where

(a)  its cost is a Canadian development expense; and

(b)  it was created in connection with an operation or an event, or a series of operations or events, further to which a depreciable property was acquired at a capital cost of less than its fair market value, determined without taking into account the royalty;

“stated percentage” means

(a)  where the taxpayer is an individual other than a trust, in respect of sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 January 1989 or of an amount of assistance related to such expenditure,

ii.  50% in respect of an expenditure incurred after 31 December 1988 and before 1 January 1990 or of an amount of assistance related to such expenditure, or

iii.  0% in respect of an expenditure incurred after 31 December 1989 or of an amount of assistance related to such expenditure;

(b)  in respect of sections 360R42 and 360R43 and, where the taxpayer is not an individual referred to in paragraph a, sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 July 1988, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital before that date,

ii.  50% in respect of an expenditure incurred after 30 June 1988 and before 1 January 1990, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after 30 June 1988 and before 1 January 1990, or

iii.  0% in respect of an expenditure incurred after 31 December 1989, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after that date;

“tar sands ore” means ore extracted, other than through a well, from a mineral resource that is a deposit of bituminous sand, oil sand or bituminous shale;

“tertiary recovery equipment” means property of a taxpayer that is included, or would be included if it were not for Class 41 in Schedule B, in Class 10 in that schedule under subparagraph d of the second paragraph of that Class 10 and that the taxpayer acquired after 31 December 1980 in order to use it in a qualified tertiary oil recovery project, but does not include property that the taxpayer has already used for other purposes or that a person with whom the taxpayer does not deal at arm’s length used before the taxpayer acquired it.

s. 360R2; O.C. 1981-80, s. 360R2; O.C. 1983-80, s. 16; O.C. 3926-80, s. 9; R.R.Q., 1981, c. I-3, r. 1, s. 360R2; O.C. 2962-82, s. 35; O.C. 500-83, s. 35; O.C. 2509-85, s. 5; O.C. 1076-88, s. 10; O.C. 91-94, s. 12; O.C. 35-96, s. 16; O.C. 1707-97, s. 42; O.C. 1466-98, s. 42; O.C. 1451-2000, s. 66; O.C. 1470-2002, s. 36; O.C. 1282-2003, s. 37; O.C. 1155-2004, s. 26; O.C. 1116-2007, s. 23; O.C. 134-2009, s. 1; O.C. 701-2013, s. 14; O.C. 1182-2017, s. 4.

2013-07-03

360R2. In this chapter,

“bituminous sands equipment” means property of a taxpayer that is included in Class 28 in Schedule B, or in Class 41 in that schedule under subparagraph a of the first paragraph of that class, and that the taxpayer acquired after 10 April 1978 mainly for the purpose of earning or producing income from one or more mines located in a deposit of bituminous sands, oil sands or oil shale from which materials are extracted, but does not include a property included in one of those classes by reason of the reference in that Class 28 to subparagraph m of the second paragraph of Class 10 in Schedule B, or where it is a property acquired before 17 November 1978 by reason of the reference, in subparagraph i of subparagraph e of the first paragraph of that Class 28, to subparagraph f of the second paragraph of that Class 10;

“Canadian exploration and development overhead expense” of a taxpayer means a taxpayer’s Canadian exploration expense or Canadian development expense that is not a Canadian renewable and conservation expense, within the meaning assigned by section 399.7R1, or a taxpayer’s share of such an expense incurred by a partnership, and that the taxpayer made or incurred after 31 December 1980

(a)  for the administration, management or financing of the taxpayer;

(b)  in respect of the remuneration and related benefits paid in respect of a person employed by the taxpayer whose duties were not all or substantially all related to exploration or development activities;

(c)  for taxes, insurance or rents in respect of, or for the maintenance of, property all or substantially all of the use of which by the taxpayer was not for the purposes of exploration or development activities; and

(d)  for the use of or the right to use any property in which any person who was connected with the taxpayer had an interest, for compensation for the performance of a service for the benefit of the taxpayer by any person who was connected with the taxpayer, or for the acquisition of any materials, parts or supplies from any person who was connected with the taxpayer, to the extent that the expense exceeds the least of amounts, each of which was the aggregate of the costs incurred by a person who was connected with the taxpayer in respect of the property, the performance of the service, or the materials, parts or supplies;

“Canadian oil and gas exploration expense” of a taxpayer means an expenditure incurred after 31 December 1980 and that would constitute a Canadian exploration expense of the taxpayer within the meaning of section 395 of the Act if that section were read without reference to paragraphs c and c.1 and with “expenses described in paragraphs a to b.1, c to c.2” in paragraph d and “an expense described in paragraphs a to c.1” in paragraph e replaced by “expenses described in paragraphs a to b.2”, except an expenditure that constitutes, under paragraph b of that section 395 where it is interpreted without taking into account the expenses incurred during the year or under subparagraph ii of paragraph b.1 of that section, a Canadian exploration expense in respect of a qualified tertiary oil recovery project;

“coal mine operator” means a person who undertakes all or substantially all of the activities related to coal production from a resource;

“conventional lands” means lands located in Canada other than non-conventional lands;

“development corporation” has the meaning assigned by section 363 of the Act;

“enhanced recovery material” means property of a taxpayer that is included in Class 10 in Schedule B under subparagraph d of the second paragraph of that class and that the taxpayer acquired after 10 April 1978 and before 1 January 1981 in order to use it in the production of a volume of oil from a reservoir or a deposit of bituminous sands, oil sands or oil shale that the taxpayer operates in Canada, that is greater than the volume that could be recovered using primary recovery techniques alone, but does not include property

(a)  that the taxpayer has already used in a primary recovery process;

(b)  that a person with whom the taxpayer was not dealing at arm’s length used before the taxpayer acquired it; and

(c)  that a person used before 11 April 1978 in the production of a volume of oil obtained from a reservoir in Canada that is greater than the volume that could be recovered using primary recovery techniques alone;

“exempt partnership” in respect of a taxpayer at a particular time means a partnership of which the taxpayer was a member throughout the period beginning on 20 December 1991 and ending at the particular time, where all or substantially all of the fair market value of the property of the partnership at the particular time is attributable to property held in connection with one or more working interests that were held by the partnership on 20 December 1991 for the production of minerals, petroleum, natural gas or related hydrocarbons, unless

(a)  any of the depreciable property acquired after 20 December 1991 and before the particular time by the partnership in connection with one of the working interests had, before the time of the acquisition, been owned by the taxpayer, or any other person with whom the taxpayer did not deal at arm’s length, and been used by the taxpayer, or that other person, in connection with that working interest; or

(b)  it is reasonable to consider that, before the particular time, amounts were charged to the partnership that would not have been so charged if Chapter III of Title XVI were read without reference to 145R4;

“exporting resource”, in respect of a property of a taxpayer used for processing, means a resource from which all or part of the ore produced during the year immediately preceding the acquisition of the property by the taxpayer was ordinarily processed outside Canada to any stage that is not beyond the prime metal stage or its equivalent;

“joint exploration corporation” has the meaning assigned by section 382 of the Act;

“mine” means any location where material is extracted from a mineral resource in Canada, excluding a well for the extraction of material from a deposit of bituminous or oil sands or oil shale;

“mining business” has the meaning assigned by section 359 of the Act;

“non-conventional lands” means lands that belong to Her Majesty in right of Canada, or in respect of which Her Majesty in right of Canada has the right to dispose of or exploit the natural resources, situated in the Yukon Territory, the Northwest Territories, or Sable Island or in those submarine areas not within a province, adjacent to the coast of Canada and extending throughout the natural prolongation of the land territory of Canada to the outer edge of the continental margin or to 200 nautical miles from the baselines from which the breadth of the territorial sea of Canada is measured, whichever is the greater;

“oil business” has the meaning assigned by section 359 of the Act;

“ore” includes ore from a mineral resource that has been processed to any stage that is prior to the prime metal stage or its equivalent;

“original owner” of a property means a person

(a)  who owned the property and disposed of it to a corporation that acquired it in circumstances in which section 360R18 applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property; and

(b)  who would, but for section 360R59, as it read in its application to a taxation year ending before 18 February 1987, or paragraph a of section 360R59, as the case may be, be entitled in computing the person’s income for a taxation year ending after the person disposed of the property, to a deduction under section 360R17 in respect of expenditures that were incurred by the person before the person disposed of the property;

“predecessor owner” of a property means a corporation that

(a)  acquired the property in circumstances where, in respect of that property, section 360R18 applies to the corporation or would apply to it if it had continued to own the property;

(b)  disposed of the property to another corporation that acquired it in circumstances where, in respect of that property, section 360R18 applies to that other corporation or would apply to it if it had continued to own the property; and

(c)  would be entitled, but for section 360R19, in respect of expenditures incurred by an original owner of the property, to a deduction under section 360R18 in computing its income for a taxation year ending after the time when it disposed of the property;

“primary recovery” means the recovery of oil from a reservoir following use of the natural energy of the reservoir to bring the oil to a producing well;

“proceeds of disposition” of a property has the meaning assigned by subparagraph f of the first paragraph of section 93 of the Act;

“production” from a Canadian resource property has the meaning assigned by the second paragraph of section 418.15 of the Act;

“production royalty” means an amount, in respect of a particular Canadian resource property, included in computing the income of a taxpayer as a rental or royalty computed by reference to the amount or value of petroleum, natural gas or related hydrocarbons either produced after 31 December 1981 from a natural accumulation of petroleum or natural gas in Canada, other than a resource, or from an oil or gas well in Canada, or produced after 30 June 1988 from a resource that is a deposit of bituminous sands, oil sands or oil shale, if

(a)  the taxpayer has a Crown royalty in respect of such production or in respect of the ownership of property to which such production relates where, in the latter case, Crown royalty is computed by reference to an amount of production from the accumulation, oil or gas well or resource, and it is reasonable in all cases to consider that the taxpayer would have had the Crown royalty if the taxpayer’s only source of income had been the rental or royalty in respect of the particular Canadian resource property; or

(b)  the taxpayer would, but for an exemption or allowance, other than a rate of nil, that is provided, pursuant to a statute, by a person referred to in section 90 of the Act, have a Crown royalty in respect of which paragraph a is applicable;

“property used for processing” means property that, before it was acquired by the taxpayer, has not been used by a person with whom the taxpayer was not dealing at arm’s length and that is property included in Class 10 in Schedule B because of subparagraph a of the second paragraph of that class or that would be so included were it not for subparagraph ii of that subparagraph a and Class 41 in Schedule B, or property included in that class because of subparagraph e of that second paragraph or that would be so included were it not for subparagraph iii of that subparagraph e and Class 41 in Schedule B;

“qualified resource”, in respect of a property of a taxpayer used for processing, means a resource which, within a reasonable time after the taxpayer acquired the property, began producing in reasonable commercial quantities or was the subject of a major expansion by virtue of which the projected greatest capacity, measured according to the weight of input of ore, of the mill that processed the ore from the resource was, in the year immediately following the expansion, not less than 25% greater than it was in the year immediately preceding the expansion;

“qualified tertiary oil recovery project” in respect of an expense incurred in a taxation year means a project that uses a method, including a method that uses carbon dioxide miscible, hydrocarbon miscible, thermal or chemical processes but not including a secondary recovery method, that is designed to recover oil from an oil well in Canada that is incremental to oil that would be recovered therefrom by primary recovery and a secondary recovery method, if

(a)  a specified royalty provision applies in the year or in the immediately following taxation year in respect of the production or any portion thereof from the production or any portion thereof from the project or in respect of the ownership of property to which such production relates;

(b)  the project is on a reserve within the meaning of the Indian Act (R.S.C. 1985, c. I-5); or

(c)  the project is located in the Province of Ontario;

“reserve amount” has the meaning assigned by subparagraph a of the first paragraph of section 418.15 of the Act;

“resource” means a mineral resource in Canada;

“secondary recovery method” means a method to recover from a reservoir oil that is incremental to oil that would be recovered therefrom by primary recovery, by supplying energy, through the use of technically proven methods, including waterflooding, to supplement or replace the natural energy of the reservoir;

“shareholder corporation” has the meaning assigned by subsection 1 of section 383 of the Act, as it read before its revocation;

“specified percentage” for a calendar year in respect of a Canadian oil and gas exploration expense of a taxpayer for that year means

(a)  in respect of such an expense incurred in respect of conventional lands, 100% for the 1981 calendar year, 60% for the 1982 calendar year and 30% for the 1983 calendar year; and

(b)  in respect of such an expense incurred in respect of non-conventional lands, 100% for the 1981 and 1982 calendar years, 60% for the 1983 calendar year and 30% for the 1984 calendar year;

“specified property” of a person means all or substantially all of the property used by the person in carrying on in Canada a business described in paragraphs a to g of section 363 of the Act;

“specified royalty” means a royalty created after 5 December 1996, otherwise than in accordance with an agreement in writing entered into on or before that date, where

(a)  its cost is a Canadian development expense; and

(b)  it was created in connection with an operation or an event, or a series of operations or events, further to which a depreciable property was acquired at a capital cost of less than its fair market value, determined without taking into account the royalty;

“stated percentage” means

(a)  where the taxpayer is an individual other than a trust, in respect of sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 January 1989 or of an amount of assistance related to such expenditure,

ii.  50% in respect of an expenditure incurred after 31 December 1988 and before 1 January 1990 or of an amount of assistance related to such expenditure, or

iii.  0% in respect of an expenditure incurred after 31 December 1989 or of an amount of assistance related to such expenditure;

(b)  in respect of sections 360R42 and 360R43 and, where the taxpayer is not an individual referred to in paragraph a, sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 July 1988, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital before that date,

ii.  50% in respect of an expenditure incurred after 30 June 1988 and before 1 January 1990, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after 30 June 1988 and before 1 January 1990, or

iii.  0% in respect of an expenditure incurred after 31 December 1989, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after that date;

“tar sands ore” means ore extracted, other than through a well, from a mineral resource that is a deposit of bituminous sand, oil sand or bituminous shale;

“tertiary recovery equipment” means property of a taxpayer that is included, or would be included if it were not for Class 41 in Schedule B, in Class 10 in that schedule under subparagraph d of the second paragraph of that Class 10 and that the taxpayer acquired after 31 December 1980 in order to use it in a qualified tertiary oil recovery project, but does not include property that the taxpayer has already used for other purposes or that a person with whom the taxpayer does not deal at arm’s length used before the taxpayer acquired it.

s. 360R2; O.C. 1981-80, s. 360R2; O.C. 1983-80, s. 16; O.C. 3926-80, s. 9; R.R.Q., 1981, c. I-3, r. 1, s. 360R2; O.C. 2962-82, s. 35; O.C. 500-83, s. 35; O.C. 2509-85, s. 5; O.C. 1076-88, s. 10; O.C. 91-94, s. 12; O.C. 35-96, s. 16; O.C. 1707-97, s. 42; O.C. 1466-98, s. 42; O.C. 1451-2000, s. 66; O.C. 1470-2002, s. 36; O.C. 1282-2003, s. 37; O.C. 1155-2004, s. 26; O.C. 1116-2007, s. 23; O.C. 134-2009, s. 1; O.C. 701-2013, s. 14.

2012-09-01

360R2. In this chapter,

“bituminous sands equipment” means property of a taxpayer that is included in Class 28 in Schedule B, or in Class 41 in that schedule under subparagraph a of the first paragraph of that class, and that the taxpayer acquired after 10 April 1978 mainly for the purpose of earning or producing income from one or more mines located in a deposit of bituminous sands, oil sands or oil shale from which materials are extracted, but does not include a property included in one of those classes by reason of the reference in that Class 28 to subparagraph m of the second paragraph of Class 10 in Schedule B, or where it is a property acquired before 17 November 1978 by reason of the reference, in subparagraph i of subparagraph e of the first paragraph of that Class 28, to subparagraph f of the second paragraph of that Class 10;

“Canadian exploration and development overhead expense” of a taxpayer means a taxpayer’s Canadian exploration expense or Canadian development expense that is not a Canadian renewable and conservation expense, within the meaning assigned by section 399.7R1, or a taxpayer’s share of such an expense incurred by a partnership, and that the taxpayer made or incurred after 31 December 1980

(a)  for the administration, management or financing of the taxpayer;

(b)  in respect of the remuneration and related benefits paid in respect of a person employed by the taxpayer whose duties were not all or substantially all related to exploration or development activities;

(c)  for taxes, insurance or rents in respect of, or for the maintenance of, property all or substantially all of the use of which by the taxpayer was not for the purposes of exploration or development activities; and

(d)  for the use of or the right to use any property in which any person who was connected with the taxpayer had an interest, for compensation for the performance of a service for the benefit of the taxpayer by any person who was connected with the taxpayer, or for the acquisition of any materials, parts or supplies from any person who was connected with the taxpayer, to the extent that the expense exceeds the least of amounts, each of which was the aggregate of the costs incurred by a person who was connected with the taxpayer in respect of the property, the performance of the service, or the materials, parts or supplies;

“Canadian oil and gas exploration expense” of a taxpayer means an expenditure incurred after 31 December 1980 and that would constitute a Canadian exploration expense of the taxpayer within the meaning of section 395 of the Act if that section were read without reference to paragraphs c and c.1 and with “expenses described in paragraphs a to b.1, c to c.2” in paragraph d and “an expense described in paragraphs a to c.1” in paragraph e replaced by “expenses described in paragraphs a to b.2”, except an expenditure that constitutes, under paragraph b of that section 395 where it is interpreted without taking into account the expenses incurred during the year or under subparagraph ii of paragraph b.1 of that section, a Canadian exploration expense in respect of a qualified tertiary oil recovery project;

“coal mine operator” means a person who undertakes all or substantially all of the activities related to coal production from a resource;

“conventional lands” means lands located in Canada other than non-conventional lands;

“development corporation” has the meaning assigned by section 363 of the Act;

“disposition of property” has the meaning assigned by subparagraph a of the first paragraph of section 93 of the Act;

“enhanced recovery material” means property of a taxpayer that is included in Class 10 in Schedule B under subparagraph d of the second paragraph of that class and that the taxpayer acquired after 10 April 1978 and before 1 January 1981 in order to use it in the production of a volume of oil from a reservoir or a deposit of bituminous sands, oil sands or oil shale that the taxpayer operates in Canada, that is greater than the volume that could be recovered using primary recovery techniques alone, but does not include property

(a)  that the taxpayer has already used in a primary recovery process;

(b)  that a person with whom the taxpayer was not dealing at arm’s length used before the taxpayer acquired it; and

(c)  that a person used before 11 April 1978 in the production of a volume of oil obtained from a reservoir in Canada that is greater than the volume that could be recovered using primary recovery techniques alone;

“exempt partnership” in respect of a taxpayer at a particular time means a partnership of which the taxpayer was a member throughout the period beginning on 20 December 1991 and ending at the particular time, where all or substantially all of the fair market value of the property of the partnership at the particular time is attributable to property held in connection with one or more working interests that were held by the partnership on 20 December 1991 for the production of minerals, petroleum, natural gas or related hydrocarbons, unless

(a)  any of the depreciable property acquired after 20 December 1991 and before the particular time by the partnership in connection with one of the working interests had, before the time of the acquisition, been owned by the taxpayer, or any other person with whom the taxpayer did not deal at arm’s length, and been used by the taxpayer, or that other person, in connection with that working interest; or

(b)  it is reasonable to consider that, before the particular time, amounts were charged to the partnership that would not have been so charged if Chapter III of Title XVI were read without reference to 145R4;

“exporting resource”, in respect of a property of a taxpayer used for processing, means a resource from which all or part of the ore produced during the year immediately preceding the acquisition of the property by the taxpayer was ordinarily processed outside Canada to any stage that is not beyond the prime metal stage or its equivalent;

“joint exploration corporation” has the meaning assigned by section 382 of the Act;

“mine” means any location where material is extracted from a mineral resource in Canada, excluding a well for the extraction of material from a deposit of bituminous or oil sands or oil shale;

“mining business” has the meaning assigned by section 359 of the Act;

“non-conventional lands” means lands that belong to Her Majesty in right of Canada, or in respect of which Her Majesty in right of Canada has the right to dispose of or exploit the natural resources, situated in the Yukon Territory, the Northwest Territories, or Sable Island or in those submarine areas not within a province, adjacent to the coast of Canada and extending throughout the natural prolongation of the land territory of Canada to the outer edge of the continental margin or to 200 nautical miles from the baselines from which the breadth of the territorial sea of Canada is measured, whichever is the greater;

“oil business” has the meaning assigned by section 359 of the Act;

“ore” includes ore from a mineral resource that has been processed to any stage that is prior to the prime metal stage or its equivalent;

“original owner” of a property means a person

(a)  who owned the property and disposed of it to a corporation that acquired it in circumstances in which section 360R18 applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property; and

(b)  who would, but for section 360R59, as it read in its application to a taxation year ending before 18 February 1987, or paragraph a of section 360R59, as the case may be, be entitled in computing the person’s income for a taxation year ending after the person disposed of the property, to a deduction under section 360R17 in respect of expenditures that were incurred by the person before the person disposed of the property;

“predecessor owner” of a property means a corporation that

(a)  acquired the property in circumstances where, in respect of that property, section 360R18 applies to the corporation or would apply to it if it had continued to own the property;

(b)  disposed of the property to another corporation that acquired it in circumstances where, in respect of that property, section 360R18 applies to that other corporation or would apply to it if it had continued to own the property; and

(c)  would be entitled, but for section 360R19, in respect of expenditures incurred by an original owner of the property, to a deduction under section 360R18 in computing its income for a taxation year ending after the time when it disposed of the property;

“primary recovery” means the recovery of oil from a reservoir following use of the natural energy of the reservoir to bring the oil to a producing well;

“proceeds of disposition” of a property has the meaning assigned by subparagraph f of the first paragraph of section 93 of the Act;

“production” from a Canadian resource property has the meaning assigned by the second paragraph of section 418.15 of the Act;

“production royalty” means an amount, in respect of a particular Canadian resource property, included in computing the income of a taxpayer as a rental or royalty computed by reference to the amount or value of petroleum, natural gas or related hydrocarbons either produced after 31 December 1981 from a natural accumulation of petroleum or natural gas in Canada, other than a resource, or from an oil or gas well in Canada, or produced after 30 June 1988 from a resource that is a deposit of bituminous sands, oil sands or oil shale, if

(a)  the taxpayer has a Crown royalty in respect of such production or in respect of the ownership of property to which such production relates where, in the latter case, Crown royalty is computed by reference to an amount of production from the accumulation, oil or gas well or resource, and it is reasonable in all cases to consider that the taxpayer would have had the Crown royalty if the taxpayer’s only source of income had been the rental or royalty in respect of the particular Canadian resource property; or

(b)  the taxpayer would, but for an exemption or allowance, other than a rate of nil, that is provided, pursuant to a statute, by a person referred to in section 90 of the Act, have a Crown royalty in respect of which paragraph a is applicable;

“property used for processing” means property that, before it was acquired by the taxpayer, has not been used by a person with whom the taxpayer was not dealing at arm’s length and that is property included in Class 10 in Schedule B because of subparagraph a of the second paragraph of that class or that would be so included were it not for subparagraph ii of that subparagraph a and Class 41 in Schedule B, or property included in that class because of subparagraph e of that second paragraph or that would be so included were it not for subparagraph iii of that subparagraph e and Class 41 in Schedule B;

“qualified resource”, in respect of a property of a taxpayer used for processing, means a resource which, within a reasonable time after the taxpayer acquired the property, began producing in reasonable commercial quantities or was the subject of a major expansion by virtue of which the projected greatest capacity, measured according to the weight of input of ore, of the mill that processed the ore from the resource was, in the year immediately following the expansion, not less than 25% greater than it was in the year immediately preceding the expansion;

“qualified tertiary oil recovery project” in respect of an expense incurred in a taxation year means a project that uses a method, including a method that uses carbon dioxide miscible, hydrocarbon miscible, thermal or chemical processes but not including a secondary recovery method, that is designed to recover oil from an oil well in Canada that is incremental to oil that would be recovered therefrom by primary recovery and a secondary recovery method, if

(a)  a specified royalty provision applies in the year or in the immediately following taxation year in respect of the production or any portion thereof from the production or any portion thereof from the project or in respect of the ownership of property to which such production relates;

(b)  the project is on a reserve within the meaning of the Indian Act (R.S.C. 1985, c. I-5); or

(c)  the project is located in the Province of Ontario;

“reserve amount” has the meaning assigned by subparagraph a of the first paragraph of section 418.15 of the Act;

“resource” means a mineral resource in Canada;

“secondary recovery method” means a method to recover from a reservoir oil that is incremental to oil that would be recovered therefrom by primary recovery, by supplying energy, through the use of technically proven methods, including waterflooding, to supplement or replace the natural energy of the reservoir;

“shareholder corporation” has the meaning assigned by subsection 1 of section 383 of the Act, as it read before its revocation;

“specified percentage” for a calendar year in respect of a Canadian oil and gas exploration expense of a taxpayer for that year means

(a)  in respect of such an expense incurred in respect of conventional lands, 100% for the 1981 calendar year, 60% for the 1982 calendar year and 30% for the 1983 calendar year; and

(b)  in respect of such an expense incurred in respect of non-conventional lands, 100% for the 1981 and 1982 calendar years, 60% for the 1983 calendar year and 30% for the 1984 calendar year;

“specified property” of a person means all or substantially all of the property used by the person in carrying on in Canada a business described in paragraphs a to g of section 363 of the Act;

“specified royalty” means a royalty created after 5 December 1996, otherwise than in accordance with an agreement in writing entered into on or before that date, where

(a)  its cost is a Canadian development expense; and

(b)  it was created in connection with an operation or an event, or a series of operations or events, further to which a depreciable property was acquired at a capital cost of less than its fair market value, determined without taking into account the royalty;

“stated percentage” means

(a)  where the taxpayer is an individual other than a trust, in respect of sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 January 1989 or of an amount of assistance related to such expenditure,

ii.  50% in respect of an expenditure incurred after 31 December 1988 and before 1 January 1990 or of an amount of assistance related to such expenditure, or

iii.  0% in respect of an expenditure incurred after 31 December 1989 or of an amount of assistance related to such expenditure;

(b)  in respect of sections 360R42 and 360R43 and, where the taxpayer is not an individual referred to in paragraph a, sections 360R31, 360R35, 360R37 and 360R41,

i.  100% in respect of an expenditure incurred before 1 July 1988, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital before that date,

ii.  50% in respect of an expenditure incurred after 30 June 1988 and before 1 January 1990, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after 30 June 1988 and before 1 January 1990, or

iii.  0% in respect of an expenditure incurred after 31 December 1989, of an amount of assistance or benefit related to such expenditure or of a cost incurred in borrowing capital after that date;

“tar sands ore” means ore extracted, other than through a well, from a mineral resource that is a deposit of bituminous sand, oil sand or bituminous shale;

“tertiary recovery equipment” means property of a taxpayer that is included, or would be included if it were not for Class 41 in Schedule B, in Class 10 in that schedule under subparagraph d of the second paragraph of that Class 10 and that the taxpayer acquired after 31 December 1980 in order to use it in a qualified tertiary oil recovery project, but does not include property that the taxpayer has already used for other purposes or that a person with whom the taxpayer does not deal at arm’s length used before the taxpayer acquired it.

s. 360R2; O.C. 1981-80, s. 360R2; O.C. 1983-80, s. 16; O.C. 3926-80, s. 9; R.R.Q., 1981, c. I-3, r. 1, s. 360R2; O.C. 2962-82, s. 35; O.C. 500-83, s. 35; O.C. 2509-85, s. 5; O.C. 1076-88, s. 10; O.C. 91-94, s. 12; O.C. 35-96, s. 16; O.C. 1707-97, s. 42; O.C. 1466-98, s. 42; O.C. 1451-2000, s. 66; O.C. 1470-2002, s. 36; O.C. 1282-2003, s. 37; O.C. 1155-2004, s. 26; O.C. 1116-2007, s. 23; O.C. 134-2009, s. 1.