I-3 - Taxation Act

Section 418.25 Disposition versions

2006-03-01

418.25. Where a corporation acquires a Canadian resource property, where section 418.19 applies in respect of the acquisition, and where the cumulative Canadian development expense of an original owner of the property determined under subparagraph i of subparagraph a of the second paragraph of section 418.19 in respect of the corporation includes a Canadian development expense incurred by the original owner in respect of an oil or gas well that would, but for this section, be deemed by section 399.3 to be a Canadian exploration expense incurred in respect of the well by the original owner at any particular time after the acquisition by the corporation and before it disposed of the property, the following rules apply:

(a)  section 399.3 does not apply in respect of the Canadian development expense incurred in respect of the well by the original owner;

(b)  an amount equal to the lesser of

i.  the amount that would be deemed by section 399.3 to be a Canadian exploration expense incurred in respect of the well by the original owner at the particular time if that section applied in respect of the expense, and

ii.  the cumulative Canadian development expense of the original owner as determined under subparagraph i of subparagraph a of the second paragraph of section 418.19 in respect of the corporation immediately before the particular time

shall be deducted at the particular time from the cumulative Canadian development expense of the original owner in respect of the corporation for the purposes of subparagraph a of the second paragraph of section 418.19;

(c)  the amount required to be deducted by paragraph b shall be added at the particular time to the cumulative Canadian exploration expense of the original owner in respect of the corporation for the purposes of the second paragraph of section 418.18.

1989, c. 77, s. 49; 1997, c. 3, s. 71.