I-3 - Taxation Act

Section 418.7 Disposition versions

2021-06-04

418.7. A taxpayer may deduct, in computing income for a taxation year, an amount not exceeding the aggregate of

(a)  the lesser of

i.  the aggregate of the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year and the amount by which the aggregate determined under subparagraph i of paragraph c of section 418.31.1 in respect of the taxpayer for the year exceeds the amount that would be determined in respect of the taxpayer for the year under section 418.12 if the aggregate last referred to in that section 418.12 were not taken into account, and

ii.  the amount by which the aggregate of all amounts each of which is an amount included in computing the taxpayer’s income for the year by reason of the disposition, in the year, of a property included in the taxpayer’s inventory under section 419, and acquired by the taxpayer under circumstances described in paragraph c of section 418.2, or an amount included, in computing the taxpayer’s income, under paragraph e of section 87 to the extent that such amount relates to that property, exceeds the aggregate of all amounts deducted as a reserve in computing the taxpayer’s income for the year under section 153 to the extent that the reserve relates to such property;

(b)  10% of the amount by which the amount determined under subparagraph i of subparagraph a exceeds the amount determined under subparagraph ii of that subparagraph a; and

(c)  the amount determined by the formula

A × (B − C).

In the formula in subparagraph c of the first paragraph,

(a)  A is

i.  where the taxation year ends before 1 January 2024, 5%,

ii.  where the taxation year begins before 1 January 2024 and ends after 31 December 2023, the amount determined by the formula

5% (D/E) + 2.5% (F/E), and

iii.  where the taxation year begins after 31 December 2023, 2.5%;

(b)  B is the aggregate of all accelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year; and

(c)  C is the amount determined by the formula

(G − H) − (I − J − K).

In the formulas in subparagraph ii of subparagraph a of the second paragraph and in subparagraph c of that paragraph,

(a)  D is the aggregate of all accelerated Canadian oil and gas property expenses incurred by the taxpayer before 1 January 2024 and in the taxation year;

(b)  E is the aggregate of all accelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year;

(c)  F is the aggregate of all accelerated Canadian oil and gas property expenses incurred by the taxpayer after 31 December 2023 and in the taxation year;

(d)  G is the aggregate of the amounts referred to in paragraphs a to f of section 418.6 at the end of the taxation year;

(e)  H is the aggregate of the amounts referred to in paragraphs a to f of section 418.6 at the beginning of the taxation year;

(f)  I is the aggregate of the amounts referred to in paragraphs a to d of section 418.5 at the end of the taxation year;

(g)  J is the aggregate of the amounts referred to in paragraphs a to d of section 418.5 at the end of the preceding taxation year; and

(h)  K is the amount described in subparagraph b of the second paragraph.

1982, c. 5, s. 103; 1993, c. 16, s. 163; 1997, c. 14, s. 69; 2021, c. 18, s. 43.

2006-03-01

418.7. A taxpayer may deduct, in computing his income for a taxation year, an amount not exceeding the aggregate of

(a)  the lesser of

i.  the aggregate of his cumulative Canadian oil and gas property expense at the end of the year and the amount by which the aggregate determined under subparagraph i of paragraph c of section 418.31.1 in respect of the taxpayer for the year exceeds the amount that would be determined in respect of the taxpayer for the year under section 418.12 if the aggregate last referred to in the said section 418.12 were not taken into account; and

ii.  the amount by which the aggregate of any amount included in computing his income for the year by reason of the disposition, in the year, of a property included in his inventory under section 419, and acquired by him under circumstances referred to in paragraph c of section 418.2, or any amount included, in computing his income, under paragraph e of section 87 to the extent that the amount relates to that property, exceeds the aggregate of any amount deducted as a reserve in computing his income for the year under section 153 to the extent that the reserve relates to such property; and

(b)  10% of the amount by which any amount determined under subparagraph i of paragraph a exceeds the amount determined under subparagraph ii of the said paragraph.

1982, c. 5, s. 103; 1993, c. 16, s. 163; 1997, c. 14, s. 69.