I-3 - Taxation Act

Section 418.19 Disposition versions

2009-05-15

418.19. Subject to sections 418.22 and 418.23, where a corporation acquired after 6 May 1974 in the case of an oil business, or after 31 March 1975 in the case of a mining business, in any manner whatsoever, a particular Canadian resource property, referred to in this section and in section 418.20 as “particular property”, it may deduct in computing its income for a taxation year an amount not exceeding the aggregate of all amounts each of which is equal to the lesser of the amount referred to in the second paragraph and the amount referred to in the third paragraph and, as the case may be, the amount referred to in section 418.20, determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to the amount by which

(a)  the amount by which

i.  the cumulative Canadian development expenses of the original owner, determined immediately after the disposition of the particular property by the original owner, to the extent that the expenses were not otherwise deducted in computing the corporation’s income for the year, were not deducted in computing the corporation’s income for any preceding taxation year or in computing the income of the original owner or any predecessor owner of the particular property for any taxation year, and were not designated by the original owner for any taxation year for the purposes of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) pursuant to subsection 14.2 of section 66 of the said Act, exceeds

ii.  all amounts required to be deducted under paragraph b of section 418.25, at any time after the disposition of the particular property by the original owner and before the end of the year, from the cumulative Canadian development expenses of the original owner in respect of a predecessor owner of the particular property or in respect of the corporation, as the case may be, exceeds

(b)  the aggregate of

i.  all amounts each of which is a particular amount, reduced by the portion thereof described in the fourth paragraph, that became receivable by a predecessor owner of the particular property or the corporation in the year or a preceding taxation year and that

(1)  was included by the predecessor owner or the corporation in computing an amount determined under subparagraph i of paragraph b of section 412 at the end of the year, and

(2)  can reasonably be regarded as attributable to the disposition of a property, in the fourth paragraph referred to as a “relevant mining property”, that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property,

ii.  all amounts each of which is a particular amount, reduced by the portion thereof described in the fifth paragraph, that became receivable by a predecessor owner of the particular property or the corporation after 31 December 1992 and in the year or a preceding taxation year and that

(1)  is designated in respect of the original owner by the predecessor owner or the corporation, as the case may be, on the prescribed form filed with the Minister within six months after the end of the taxation year in which the particular amount became receivable,

(2)  was included by the predecessor owner or the corporation in computing an amount determined under subparagraph i of paragraph b of section 418.6 at the end of the year, and

(3)  can reasonably be regarded as attributable to the disposition of a property, in the fifth paragraph referred to as a “relevant oil and gas property”, that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property, and

iii.  any amount by which the amount determined under this paragraph is required, because of section 485.8, to be reduced at or before the end of the year.

The second amount to which the first paragraph refers is equal to the amount by which

(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 may reasonably be regarded as attributable to

(1)  its reserve amount for the year in respect of the original owner and each predecessor owner of the particular property, or

(2)  production from the particular property, and

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

(b)  the aggregate of

i.  any other amount deducted under section 88.4 of the Act respecting the application of the Taxation Act, to the extent that that section refers to subsection 25 of section 29 of the Income Tax Application Rules (R.S.C. 1985, c. 2 (5th Suppl.)), this section and sections 418.16, 418.18 and 418.21 for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph a in respect of the particular property, and

ii.  any other amount added, because of section 485.13, in computing the amount determined under subparagraph a.

The particular amount mentioned in subparagraph i of subparagraph b 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 respect of another original owner of a relevant mining property who is not a predecessor owner of a relevant mining property or who became a predecessor owner of a relevant mining property before the original owner became a predecessor owner of a relevant mining property.

The particular amount mentioned in subparagraph ii of subparagraph b 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 the second paragraph of section 418.21 in respect of the original owner or under the second paragraph, or the second paragraph of section 418.21, in respect of another original owner of a relevant oil and gas property who is not a predecessor owner of a relevant oil and gas property or who became a predecessor owner of a relevant oil and gas property before the original owner became a predecessor owner of a relevant oil and gas property.

1989, c. 77, s. 49; 1993, c. 16, s. 168; 1995, c. 49, s. 112; 1996, c. 39, s. 120; 1997, c. 3, s. 71; 1998, c. 16, s. 251; 2000, c. 5, s. 293; 2009, c. 5, s. 134.

2006-03-01

418.19. Subject to sections 418.22 and 418.23, where a corporation acquired after 6 May 1974 in the case of an oil business, or after 31 March 1975 in the case of a mining business, in any manner whatsoever, a particular Canadian resource property, referred to in this section and in section 418.20 as “particular property”, it may deduct in computing its income for a taxation year an amount not exceeding the aggregate of all amounts each of which is equal to the lesser of the amount referred to in the second paragraph and the amount referred to in the third paragraph and, as the case may be, the amount referred to in section 418.20, determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to the amount by which

(a)  the amount by which

i.  the cumulative Canadian development expenses of the original owner, determined immediately after the disposition of the particular property by the original owner, to the extent that the expenses were not otherwise deducted in computing the corporation’s income for the year, were not deducted in computing the corporation’s income for any preceding taxation year or in computing the income of the original owner or any predecessor owner of the particular property for any taxation year, and were not designated by the original owner for any taxation year for the purposes of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement) pursuant to subsection 14.2 of section 66 of the said Act, exceeds

ii.  all amounts required to be deducted under paragraph b of section 418.25, at any time after the disposition of the particular property by the original owner and before the end of the year, from the cumulative Canadian development expenses of the original owner in respect of a predecessor owner of the particular property or in respect of the corporation, as the case may be, exceeds

(b)  the aggregate of

i.  all amounts each of which is a particular amount, reduced by the portion thereof described in the fourth paragraph, that became receivable by a predecessor owner of the particular property or the corporation in the year or a preceding taxation year and that

(1)  was included by the predecessor owner or the corporation in computing an amount determined under subparagraph i of paragraph b of section 412 at the end of the year, and

(2)  can reasonably be regarded as attributable to the disposition of a property, in the fourth paragraph referred to as a “relevant mining property”, that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property,

ii.  all amounts each of which is a particular amount, reduced by the portion thereof described in the fifth paragraph, that became receivable by a predecessor owner of the particular property or the corporation after 31 December 1992 and in the year or a preceding taxation year and that

(1)  is designated in respect of the original owner by the predecessor owner or the corporation, as the case may be, on the prescribed form filed with the Minister within six months after the end of the taxation year in which the particular amount became receivable,

(2)  was included by the predecessor owner or the corporation in computing an amount determined under subparagraph i of paragraph b of section 418.6 at the end of the year, and

(3)  can reasonably be regarded as attributable to the disposition of a property, in the fifth paragraph referred to as a “relevant oil and gas property”, that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the corporation or a predecessor owner of the particular property, and

iii.  any amount by which the amount determined under this paragraph is required, because of section 485.8, to be reduced at or before the end of the year.

The second amount to which the first paragraph refers is equal to the amount by which

(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 may reasonably be regarded as attributable to

(1)  its reserve amount for the year in respect of the original owner and each predecessor owner of the particular property, or

(2)  production from the particular property, and

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

(b)  the aggregate of

i.  any other amount deducted under section 88.4 of the Act respecting the application of the Taxation Act, to the extent that that section refers to subsection 25 of section 29 of the Income Tax Application Rules (Revised Statutes of Canada, 1985, chapter 2, 5th Supplement), this section and sections 418.16, 418.18 and 418.21 for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph a in respect of the particular property, and

ii.  any other amount added, because of section 485.13, in computing the amount determined under subparagraph a.

The particular amount mentioned in subparagraph i of subparagraph b 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 respect of another original owner of a relevant mining property who is not a predecessor owner of a relevant mining property or who became a predecessor owner of a relevant mining property before the original owner became a predecessor owner of a relevant mining property.

The particular amount mentioned in subparagraph ii of subparagraph b 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 the second paragraph of section 418.21 in respect of the original owner or under the second paragraph, or the second paragraph of section 418.21, in respect of another original owner of a relevant oil and gas property who is not a predecessor owner of a relevant oil and gas property or who became a predecessor owner of a relevant oil and gas property before the original owner became a predecessor owner of a relevant oil and gas property.

1989, c. 77, s. 49; 1993, c. 16, s. 168; 1995, c. 49, s. 112; 1996, c. 39, s. 120; 1997, c. 3, s. 71; 1998, c. 16, s. 251; 2000, c. 5, s. 293.