I-3 - Taxation Act

Section 418.17.3 Disposition versions

2009-05-15

418.17.3. Subject to sections 418.22 and 418.24, where a corporation acquires, in any manner whatever, a particular foreign resource property, in this section referred to as the “particular property”, in relation to a particular country, there may be deducted by the corporation in computing its income for a taxation year an amount not exceeding the aggregate of all amounts each of which is an amount equal to the lesser of the amount described in the second paragraph and the amount described in the third paragraph determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to 30% of the amount by which the cumulative foreign resource expense, in relation to the particular country, of the original owner determined immediately after the disposition of the particular property by the original owner to the extent that it has not been otherwise deducted in computing the corporation’s income for the year, has not been deducted in computing the corporation’s income for any preceding taxation year and has not been deducted in computing the income of the original owner or any predecessor owner of the particular property for any taxation year, exceeds the aggregate of

(a)  the aggregate of all amounts each of which is a particular amount, reduced by the portion of that amount provided for in the fifth paragraph, that became receivable by a predecessor owner of the particular property, or by the corporation in the year or a preceding taxation year, and that

i.  was included by the predecessor owner or the corporation in computing an amount determined, without reference to section 418.1.5, under paragraph b of section 418.1.4 at the end of the year, and

ii.  can reasonably be attributed to the disposition of a property, in the fifth paragraph referred to as the “particular resource property”, that is the particular property or another foreign resource property, in relation to the particular country, that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property; and

(b)  the aggregate of all amounts each of which is an amount by which the amount determined under this paragraph is required by reason of section 485.8 to be reduced at or before the end of the year.

The last amount to which the first paragraph refers is equal to the amount by which the amount determined under the fourth paragraph is exceeded by the aggregate of

(a)  the lesser of

i.  the part of the corporation’s income for the year, determined before any deduction under section 88.4 of the Act respecting the application of the Taxation Act (chapter I-4) or any of sections 359 to 419.6, that can reasonably be attributed to the production from the particular property, and

ii.  where the corporation acquires the particular property from the original owner at any time in the year, otherwise than as a result of an amalgamation or merger or solely by reason of the application of subparagraph a of the first paragraph of section 418.26 and did not deal with the original owner at arm’s length at that time, nil; and

(b)  unless the amount determined under subparagraph a is nil by reason of subparagraph ii of that subparagraph, the lesser of

i.  the aggregate of all amounts each of which is the amount designated by the corporation for the year in respect of a Canadian resource property owned by the original owner immediately before being acquired with the particular property by the corporation or a predecessor owner of the particular property, not exceeding the amount included in computing the corporation’s income for the year, determined before any deduction under section 88.4 of the Act respecting the application of the Taxation Act or any of sections 359 to 419.6, that can reasonably be attributed to the production from the Canadian resource property, and

ii.  the amount by which 10% of the amount described in the second paragraph for the year, in respect of the original owner, exceeds the aggregate of all amounts each of which would, but for this subparagraph, subparagraph ii of subparagraph b of the third paragraph of section 418.17 and subparagraph ii of subparagraph f of the first paragraph of section 418.26, be determined under this paragraph for the year in respect of the particular property or other foreign resource property, in relation to the particular country, owned by the original owner immediately before being acquired with the particular property by the corporation or a predecessor owner of the particular property.

The amount that, for the purposes of the third paragraph, is required to be determined under this paragraph is the aggregate of

(a)  any other amount deducted for the year under this section, section 418.17 or section 418.19 as a consequence of the application of subparagraph c of the first paragraph of section 418.20, that can reasonably be attributed to the part of the corporation’s income for the year, described in subparagraph a of the third paragraph, in relation to the particular property;

(b)  any other amount deducted for the year under this section or section 418.17, that can reasonably be attributed to a part of the corporation’s income for the year, described in subparagraph i of subparagraph b of the third paragraph, in respect of which an amount is designated by the corporation under that subparagraph; and

(c)  any amount added, by reason of section 485.13, in computing the amount determined under subparagraph a of the third paragraph.

The particular amount referred to in subparagraph a of the second paragraph shall be reduced by the portion thereof that can reasonably be considered to result in a reduction of the amount otherwise determined under that paragraph in relation to another original owner of a particular resource property who is not a predecessor owner of a particular resource property or who became such a predecessor owner before the original owner became a predecessor owner of a particular resource property.

The income in respect of which an amount is designated under subparagraph i of subparagraph b of the third paragraph is deemed, for the purposes of the following provisions, not to be attributable to the production from a Canadian resource property:

(a)  subparagraph iii of subparagraph a of the third paragraph of sections 418.16 and 418.18;

(b)  subparagraph 2 of subparagraph i of subparagraph a of the third paragraph of section 418.19;

(c)  subparagraph i of subparagraph c of the first paragraph of section 418.20;

(d)  subparagraph 2 of subparagraph i of subparagraph a of the third paragraph of section 418.21;

(e)  paragraph a of section 418.28; and

(f)  section 88.4 of the Act respecting the application of the Taxation Act, to the extent that that section refers to clause B of subparagraph i of paragraph d of subsection 25 of section 29 of the Income Tax Application Rules (R.S.C. 1985, c. 2 (5th Suppl.)).

2004, c. 8, s. 84; 2009, c. 5, s. 133.

2006-03-01

418.17.3. Subject to sections 418.22 and 418.24, where a corporation acquires, in any manner whatever, a particular foreign resource property, in this section referred to as the “particular property”, in relation to a particular country, there may be deducted by the corporation in computing its income for a taxation year an amount not exceeding the aggregate of all amounts each of which is an amount equal to the lesser of the amount described in the second paragraph and the amount described in the third paragraph determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to 30% of the amount by which the cumulative foreign resource expense, in relation to the particular country, of the original owner determined immediately after the disposition of the particular property by the original owner to the extent that it has not been otherwise deducted in computing the corporation’s income for the year, has not been deducted in computing the corporation’s income for any preceding taxation year and has not been deducted in computing the income of the original owner or any predecessor owner of the particular property for any taxation year, exceeds the aggregate of

(a)  the aggregate of all amounts each of which is a particular amount, reduced by the portion of that amount provided for in the fifth paragraph, that became receivable by a predecessor owner of the particular property, or by the corporation in the year or a preceding taxation year, and that

i.  was included by the predecessor owner or the corporation in computing an amount determined, without reference to section 418.1.5, under paragraph b of section 418.1.4 at the end of the year, and

ii.  can reasonably be attributed to the disposition of a property, in the fifth paragraph referred to as the “particular resource property”, that is the particular property or another foreign resource property, in relation to the particular country, that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property; and

(b)  the aggregate of all amounts each of which is an amount by which the amount determined under this paragraph is required by reason of section 485.8 to be reduced at or before the end of the year.

The last amount to which the first paragraph refers is equal to the amount by which the amount determined under the fourth paragraph is exceeded by the aggregate of

(a)  the lesser of

i.  the part of the corporation’s income for the year, determined before any deduction under section 88.4 of the Act respecting the application of the Taxation Act (chapter I-4) or any of sections 359 to 419.6, that can reasonably be attributed to the production from the particular property, and

ii.  where the corporation acquires the particular property from the original owner at any time in the year, otherwise than as a result of an amalgamation or merger or solely by reason of the application of paragraph a of section 418.26 and did not deal with the original owner at arm’s length at that time, nil; and

(b)  unless the amount determined under subparagraph a is nil by reason of subparagraph ii of that subparagraph, the lesser of

i.  the aggregate of all amounts each of which is the amount designated by the corporation for the year in respect of a Canadian resource property owned by the original owner immediately before being acquired with the particular property by the corporation or a predecessor owner of the particular property, not exceeding the amount included in computing the corporation’s income for the year, determined before any deduction under section 88.4 of the Act respecting the application of the Taxation Act or any of sections 359 to 419.6, that can reasonably be attributed to the production from the Canadian resource property, and

ii.  the amount by which 10% of the amount described in the second paragraph for the year, in respect of the original owner, exceeds the aggregate of all amounts each of which would, but for this subparagraph, subparagraph ii of subparagraph b of the third paragraph of section 418.17 and subparagraph ii of paragraph f of section 418.26, be determined under this paragraph for the year in respect of the particular property or other foreign resource property, in relation to the particular country, owned by the original owner immediately before being acquired with the particular property by the corporation or a predecessor owner of the particular property.

The amount that, for the purposes of the third paragraph, is required to be determined under this paragraph is the aggregate of

(a)  any other amount deducted for the year under this section, section 418.17 or section 418.19 as a consequence of the application of subparagraph c of the first paragraph of section 418.20, that can reasonably be attributed to the part of the corporation’s income for the year, described in subparagraph a of the third paragraph, in relation to the particular property;

(b)  any other amount deducted for the year under this section or section 418.17, that can reasonably be attributed to a part of the corporation’s income for the year, described in subparagraph i of subparagraph b of the third paragraph, in respect of which an amount is designated by the corporation under that subparagraph; and

(c)  any amount added, by reason of section 485.13, in computing the amount determined under subparagraph a of the third paragraph.

The particular amount referred to in subparagraph a of the second paragraph shall be reduced by the portion thereof that can reasonably be considered to result in a reduction of the amount otherwise determined under that paragraph in relation to another original owner of a particular resource property who is not a predecessor owner of a particular resource property or who became such a predecessor owner before the original owner became a predecessor owner of a particular resource property.

The income in respect of which an amount is designated under subparagraph i of subparagraph b of the third paragraph is deemed, for the purposes of the following provisions, not to be attributable to the production from a Canadian resource property:

(a)  subparagraph iii of subparagraph a of the third paragraph of sections 418.16 and 418.18;

(b)  subparagraph 2 of subparagraph i of subparagraph a of the third paragraph of section 418.19;

(c)  subparagraph i of subparagraph c of the first paragraph of section 418.20;

(d)  subparagraph 2 of subparagraph i of subparagraph a of the third paragraph of section 418.21;

(e)  paragraph a of section 418.28; and

(f)  section 88.4 of the Act respecting the application of the Taxation Act, to the extent that that section refers to clause B of subparagraph i of paragraph d of subsection 25 of section 29 of the Income Tax Application Rules (Revised Statutes of Canada, 1985, chapter 2, 5th Supplement).

2004, c. 8, s. 84.