I-3 - Taxation Act

Section 418.21 Disposition versions

2009-05-15

418.21. Subject to sections 418.22 and 418.23, where after 11 December 1979 a corporation acquired, in any manner whatsoever, a particular Canadian resource property, referred to in this section 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, determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to 10% of the excess amount, over the aggregate of all amounts each of which is an 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, of the amount by which

(a)  the cumulative Canadian oil and gas property expense 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 and has not been 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, exceeds

(b)  the aggregate of 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

i.  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

ii.  can reasonably be regarded as attributable to the disposition of a property, in the fourth 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.

The last 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 section 418.16, 418.18 or 418.19 for the year that may 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 amount added, because of section 485.13, in computing the amount determined under subparagraph a.

The particular amount mentioned in 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, or the second paragraph of section 418.19, 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. 169; 1995, c. 49, s. 113; 1996, c. 39, s. 122; 1997, c. 3, s. 71; 1998, c. 16, s. 251; 2000, c. 5, s. 293; 2009, c. 5, s. 135.

2006-03-01

418.21. Subject to sections 418.22 and 418.23, where after 11 December 1979 a corporation acquired, in any manner whatsoever, a particular Canadian resource property, referred to in this section 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, determined in respect of an original owner of the particular property.

The first amount to which the first paragraph refers is equal to 10% of the excess amount, over the aggregate of all amounts each of which is an 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, of the amount by which

(a)  the cumulative Canadian oil and gas property expense 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 and has not been 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, exceeds

(b)  the aggregate of 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

i.  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

ii.  can reasonably be regarded as attributable to the disposition of a property, in the fourth 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.

The last 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 section 418.16, 418.18 or 418.19 for the year that may 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 amount added, because of section 485.13, in computing the amount determined under subparagraph a.

The particular amount mentioned in 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, or the second paragraph of section 418.19, 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. 169; 1995, c. 49, s. 113; 1996, c. 39, s. 122; 1997, c. 3, s. 71; 1998, c. 16, s. 251; 2000, c. 5, s. 293.