I-3 - Taxation Act

Section 395 Disposition versions

2020-09-24

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, after 31 March 1975 in the case of a mining business or after 5 December 1996 in all other cases, to such extent as that expense is, as the case may be,

(a)  any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas (other than a mineral resource) in Canada, including

i.  a geological, geophysical or geochemical expense, or

ii.  an expense for environmental studies or community consultations (including studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas in Canada);

(a.1)  any expense, including clearing , removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas;

(2)  the discovery occurred at any time before six months after the end of the year; and

(3)  the expense is incurred before 1 January 2019, excluding an expense that is deemed to have been incurred on 31 December 2018 under section 359.8, or before 1 January 2021 in connection with an obligation in writing entered into by the taxpayer before 22 March 2017, including an obligation towards a government under the terms of a license or permit, excluding an expense that is deemed to have been incurred on 31 December 2020 under section 359.8;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling and any expense for environmental studies or community consultations (including, despite subparagraph i, studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of such a mineral resource), but not including

i.  any Canadian development expense, and

ii.  any expense that may reasonably be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  any expense incurred by the taxpayer after 16 November 1978 and before 21 March 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities, including any expense for clearing, removing overburden and stripping, sinking a mine shaft and constructing an adit or other underground entry, to the extent that the expense was incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(c.3)  any expense incurred by the taxpayer after 21 March 2011 that is an eligible oil sands mine development expense or a specified oil sands mine development expense;

(c.4)  any expense that would be described in paragraph c.1 if that paragraph were read as if “21 March 2013” were replaced by “1 January 2017” and that is incurred by the taxpayer

i.  in accordance with an agreement in writing entered into by the taxpayer before 21 March 2013, or

ii.  as part of the development of a new mine, if

(1)  construction work in relation to the new mine, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013, or

(2)  engineering and design work for the construction of the new mine, as evidenced in writing, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013;

(c.5)  the portion of any expense not described in paragraph c.4 that would be described in paragraph c.1 if that paragraph c.1 were read as if “21 March 2013” were replaced by “1 January 2018” and that is

i.  100% of the expense if it is incurred before 1 January 2015,

ii.  80% of the expense if it is incurred in the calendar year 2015,

iii.  60% of the expense if it is incurred in the calendar year 2016, and

iv.  30% of the expense if it is incurred in the calendar year 2017;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.5 and incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any right in or to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72; 2012, c. 8, s. 51; 2013, c. 10, s. 31; 2015, c. 24, s. 64; 2017, c. 29, s. 62; 2020, c. 16, s. 64.

2017-12-07

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, after 31 March 1975 in the case of a mining business or after 5 December 1996 in all other cases, to such extent as that expense is, as the case may be,

(a)  any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas (other than a mineral resource) in Canada, including

i.  a geological, geophysical or geochemical expense, or

ii.  an expense for environmental studies or community consultations (including studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas in Canada);

(a.1)  any expense, including clearing , removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas, and

(2)  the discovery occurred at any time before six months after the end of the year;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling and any expense for environmental studies or community consultations (including, despite subparagraph i, studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of such a mineral resource), but not including

i.  any Canadian development expense, and

ii.  any expense that may reasonably be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  any expense incurred by the taxpayer after 16 November 1978 and before 21 March 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities, including any expense for clearing, removing overburden and stripping, sinking a mine shaft and constructing an adit or other underground entry, to the extent that the expense was incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(c.3)  any expense incurred by the taxpayer after 21 March 2011 that is an eligible oil sands mine development expense or a specified oil sands mine development expense;

(c.4)  any expense that would be described in paragraph c.1 if that paragraph were read as if “21 March 2013” were replaced by “1 January 2017” and that is incurred by the taxpayer

i.  in accordance with an agreement in writing entered into by the taxpayer before 21 March 2013, or

ii.  as part of the development of a new mine, if

(1)  construction work in relation to the new mine, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013, or

(2)  engineering and design work for the construction of the new mine, as evidenced in writing, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013;

(c.5)  the portion of any expense not described in paragraph c.4 that would be described in paragraph c.1 if that paragraph c.1 were read as if “21 March 2013” were replaced by “1 January 2018” and that is

i.  100% of the expense if it is incurred before 1 January 2015,

ii.  80% of the expense if it is incurred in the calendar year 2015,

iii.  60% of the expense if it is incurred in the calendar year 2016, and

iv.  30% of the expense if it is incurred in the calendar year 2017;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.5 and incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any interest in or right to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72; 2012, c. 8, s. 51; 2013, c. 10, s. 31; 2015, c. 24, s. 64; 2017, c. 29, s. 62.

2015-10-26

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, after 31 March 1975 in the case of a mining business or after 5 December 1996 in all other cases, to such extent as that expense is, as the case may be,

(a)  any expense including an expense for a geological, geophysical or geochemical survey, other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas, other than a mineral resource, in Canada;

(a.1)  any expense, including clearing, removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas, and

(2)  the discovery occurred at any time before six months after the end of the year;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  any expense incurred by the taxpayer to determine the existence of a mineral resource in Canada, to locate such a resource or to determine the extent or quality of such a resource, including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling, other than any expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, and other than Canadian development expenses or any expense that may reasonably be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  any expense incurred by the taxpayer after 16 November 1978 and before 21 March 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities, including any expense for clearing, removing overburden and stripping, sinking a mine shaft and constructing an adit or other underground entry, to the extent that the expense was incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(c.3)  any expense incurred by the taxpayer after 21 March 2011 that is an eligible oil sands mine development expense or a specified oil sands mine development expense;

(c.4)  any expense that would be described in paragraph c.1 if that paragraph were read as if “21 March 2013” were replaced by “1 January 2017” and that is incurred by the taxpayer

i.  in accordance with an agreement in writing entered into by the taxpayer before 21 March 2013, or

ii.  as part of the development of a new mine, if

(1)  construction work in relation to the new mine, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013, or

(2)  engineering and design work for the construction of the new mine, as evidenced in writing, other than work that involves obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities, was started by, or on behalf of, the taxpayer before 21 March 2013;

(c.5)  the portion of any expense not described in paragraph c.4 that would be described in paragraph c.1 if that paragraph c.1 were read as if “21 March 2013” were replaced by “1 January 2018” and that is

i.  100% of the expense if it is incurred before 1 January 2015,

ii.  80% of the expense if it is incurred in the calendar year 2015,

iii.  60% of the expense if it is incurred in the calendar year 2016, and

iv.  30% of the expense if it is incurred in the calendar year 2017;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.5 and incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any interest in or right to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72; 2012, c. 8, s. 51; 2013, c. 10, s. 31; 2015, c. 24, s. 64.

2013-06-05

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, after 31 March 1975 in the case of a mining business or after 5 December 1996 in all other cases, to such extent as that expense is

(a)  any expense including an expense for a geological, geophysical or geochemical survey, other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas, other than a mineral resource, in Canada;

(a.1)  any expense, including clearing, removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas, and

(2)  the discovery occurred at any time before six months after the end of the year;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  any expense incurred by the taxpayer to determine the existence of a mineral resource in Canada, to locate such a resource or to determine the extent or quality of such a resource, including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling, other than any expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, and other than Canadian development expenses or any expense that may reasonably be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  any expense incurred by the taxpayer after 16 November 1978 to bring a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities, including any expense for clearing, removing overburden and stripping, sinking a mine shaft or constructing an adit or other underground entry, to the extent that these expenses were incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(c.3)  any expense incurred by the taxpayer after 21 March 2011 that is an eligible oil sands mine development expense or a specified oil sands mine development expense;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.2 incurred by a partnership in a fiscal period thereof, if at the end of the period the taxpayer is a member thereof; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any interest in or right to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72; 2012, c. 8, s. 51; 2013, c. 10, s. 31.

2012-05-09

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, or after 31 March 1975 in the case of a mining business, to such extent as that expense is

(a)  any expense including an expense for a geological, geophysical or geochemical survey, other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas, other than a mineral resource, in Canada;

(a.1)  any expense, including clearing, removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas, and

(2)  the discovery occurred at any time before six months after the end of the year;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  any expense incurred by the taxpayer to determine the existence of a mineral resource in Canada, to locate such a resource or to determine the extent or quality of such a resource, including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling, other than any expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, and other than Canadian development expenses or any expense that may reasonably be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  any expense incurred by the taxpayer after 16 November 1978 to bring a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities, including any expense for clearing, removing overburden and stripping, sinking a mine shaft or constructing an adit or other underground entry, to the extent that these expenses were incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(c.3)  any expense incurred by the taxpayer after 21 March 2011 that is an eligible oil sands mine development expense or a specified oil sands mine development expense;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.2 incurred by a partnership in a fiscal period thereof, if at the end of the period the taxpayer is a member thereof; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any interest in or right to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72; 2012, c. 8, s. 51.

2006-03-01

395. For the purposes of this chapter, “Canadian exploration expense” of a taxpayer means any expense incurred after 6 May 1974 in the case of an oil business, or after 31 March 1975 in the case of a mining business, to such extent as that expense is

(a)  any expense including an expense for a geological, geophysical or geochemical survey, other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas, other than a mineral resource, in Canada;

(a.1)  any expense, including clearing, removing overburden and stripping, sinking a well and constructing an adit or other underground entry, incurred by him after 31 March 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas, other than a mineral resource, in Canada into production other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well and incurred prior to the commencement of the production, other than the production from an oil or gas well, in reasonable commercial quantities from such accumulation;

(b)  any expense incurred before 1 April 1987, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well, incurred by him in the year or in any previous year, and included by him in computing his Canadian development expenses for a previous taxation year, if the drilling of the well is completed within six months after the end of the year and

i.  it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas not previously known to exist, other than a mineral resource, or

ii.  it is reasonable to expect that the well cannot come into production in commercial quantities within 12 months of its completion;

(b.1)  any expense incurred by him after 31 March 1987 and in a taxation year of the taxpayer, in drilling or completing an oil or gas well in Canada, or in building a temporary access road to, or preparing a site in respect of, any such well if

i.  the drilling or completing of the well resulted in the discovery of a natural underground reservoir containing petroleum or natural gas, where

(1)  before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas, and

(2)  the discovery occurred at any time before six months after the end of the year;

ii.  the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes;

iii.  the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes; or

iv.  the certificate referred to in subparagraph iv of paragraph d of the definition of “Canadian exploration expenses” in subsection 6 of section 66.1 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement), in respect of a well has been filed with the Minister, in respect of the well, on or before the day that is six months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced;

(b.2)  any expense deemed under section 399.3 to be a Canadian exploration expense incurred by him;

(c)  an expense incurred by him to determine the existence of a mineral resource in Canada, to locate such a resource or to determine the extent or quality thereof, including any expense incurred in the course of prospecting, carrying out geological, geophysical or geochemical surveys, drilling and trenching or digging test pits or preliminary sampling, other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well, and other than any Canadian development expense or any expense that may reasonably be related to a mine which has come into production in reasonable commercial quantities or to an actual or potential extension of such a mine;

(c.1)  an expense incurred by him after 16 November 1978 to bring a new mine in a mineral resource in Canada into production in reasonable commercial quantities, including clearing, removing overburden and stripping, sinking a mine shaft and constructing an adit or other underground entry, to the extent that these expenses were incurred prior to the commencement of production from the new mine in reasonable commercial quantities;

(c.2)  any Canadian renewable and conservation expense incurred by the taxpayer;

(d)  subject to section 418.37, the taxpayer’s share of the expenses described in paragraphs a to b.1 and c to c.2 incurred by a partnership in a fiscal period thereof, if at the end of the period the taxpayer is a member thereof; or

(e)  an expense described in paragraphs a to c.1 incurred by him pursuant to an agreement in writing with a corporation entered into before 1 January 1987, under which he incurs that expense solely as consideration for a share, except a prescribed share, of the capital stock of that corporation issued to him or any interest in or right to such a share.

1975, c. 22, s. 90; 1980, c. 13, s. 35; 1982, c. 5, s. 89; 1984, c. 15, s. 88; 1986, c. 15, s. 80; 1986, c. 19, s. 80; 1987, c. 67, s. 88; 1988, c. 18, s. 28; 1990, c. 59, s. 161; 1992, c. 1, s. 33; 1995, c. 49, s. 100; 1997, c. 3, s. 71; 1998, c. 16, s. 145; 2004, c. 8, s. 72.