1210 (1) For the purpose of paragraph 20(1)(v.1) of the Act, there may be deducted in computing the income of a taxpayer for a taxation year the amount determined by the formula
.25(A - B) - C
where
- A
- is the taxpayer’s adjusted resource profits for the year;
- B
- is the total of all amounts each of which is a Canadian exploration and development overhead expense made or incurred by the taxpayer in the year, other than an amount included therein because of subsection 21(2) or (4) of the Act; and
- C
- is the amount, if any, by which
(a) the total of all amounts determined under paragraphs 1205(1)(e) to (k) in computing the taxpayer’s earned depletion base at the end of the year, other than any portion of that total determined under paragraph 1205(1)(i) as a consequence of a disposition in the year of property in circumstances to which subsection 1202(2) applies
exceeds
(b) 33 1/3 per cent of the total of all amounts determined under paragraphs 1205(1)(a) to (d.2) in computing the taxpayer’s earned depletion base at the end of the year.
(2) For the purposes of this section, “adjusted resource profits” of a taxpayer for a taxation year is the amount, which may be positive or negative, determined by the formula
A + B - C
where
- A
- is the amount that would be the taxpayer’s resource profits for the year if the following assumptions were made:
(a) the amount determined under paragraph 1204(1)(a) were nil,
(b) subsection 1204(1) were read without reference to subparagraph 1204(1)(b)(iv) and the definition resource activity in subsection 1206(1) were read without reference to paragraph (d) of that definition,
(c) the following amounts were not deducted in computing the taxpayer’s gross resource profits for the year and were not deducted in computing the taxpayer’s resource profits for the year:
(i) each amount deducted in computing the taxpayer’s income for the year in respect of a rental or royalty paid or payable by the taxpayer (other than an amount prescribed by section 1211, an amount that is a production royalty or an amount paid or payable in respect of a specified royalty) computed by reference to the amount or value of petroleum, natural gas or related hydrocarbons
(A) produced from a natural accumulation (other than a resource) of petroleum or natural gas in Canada or an oil or gas well in Canada, or
(B) produced from a resource that is a bituminous sands deposit, oil sands deposit or oil shale deposit,
(ii) each amount deducted in computing the taxpayer’s income for the year
(A) under any of paragraphs 20(1)(e), (e.1), (e.2) and (f) of the Act, or
(B) as, on account of or in lieu of, interest in respect of a debt owed by the taxpayer, and
(iii) each amount deducted under any of paragraph 20(1)(v.1) and sections 65 to 66.7 of the Act and subsections 17(2) and (6) and section 29 of the Income Tax Application Rules,
(d) each amount that is the taxpayer’s share of the income or loss of a partnership from any source were not taken into account, and
(e) subsections 1204(1) and (1.1) provided for the computation of negative amounts where the amounts subtracted in computing gross resource profits and resource profits exceed the amounts added in computing those amounts;
- B
- is the total of all amounts each of which is the taxpayer’s share of the adjusted resource profits of a partnership for the year, as determined under subsection (3) or (4); and
- C
- is the amount, if any, by which the total of
(a) the total of all amounts each of which is an amount included in the taxpayer’s gross resource profits for the year as a rental or royalty (other than a production royalty or a specified royalty) computed by reference to the amount or value of petroleum, natural gas or related hydrocarbons produced from
(i) a natural accumulation (other than a resource) of petroleum or natural gas in Canada or an oil or gas well in Canada, or
(ii) a resource that is a bituminous sands deposit or oil shale deposit, and
(b) 50 per cent of all amounts included in computing the taxpayer’s gross resource profits for the year in respect of specified royalties
exceeds
(c) if the year ends after March 6, 1996, the total of all outlays and expenses that were made or incurred in respect of the total described in paragraph (a) to the extent that the outlays and expenses were deducted in computing the taxpayer’s gross resource profits for the year.
(3) Where a taxpayer is a member of a partnership in a fiscal period of the partnership that ends in a taxation year of the taxpayer, the taxpayer’s share of the partnership’s adjusted resource profits for the year is
(a) nil, where the fiscal period began before December 21, 1991; and
(b) in any other case, the amount, which may be positive or negative, that could, if this subsection did not apply, reasonably be considered to represent the taxpayer’s share of the partnership’s adjusted resource profits for the fiscal period, determined on the assumption that each partnership is a taxpayer the fiscal period of which is a taxation year.
(4) Notwithstanding subsection (3), where a taxpayer is a member of an exempt partnership in a fiscal period of the partnership that begins before 2000 and ends in a taxation year of the taxpayer and the taxpayer’s share of the partnership’s adjusted resource profits for the year would, if this subsection did not apply, be a negative amount, the taxpayer’s share of the partnership’s adjusted resource profits for the year is the amount, which may be positive or negative, determined by the formula
A × B
where
- A
- is the amount that would, if this subsection did not apply, be the taxpayer’s share of the partnership’s adjusted resource profits for the year; and
- B
- is
(a) nil, where
(i) the partnership is an exempt partnership in respect of the taxpayer at the end of the fiscal period, and
(ii) at the end of the fiscal period, all or substantially all of the assets of the partnership were held in connection with one or more working interests
(A) the production from which began in reasonable commercial quantities before December 21, 1991, or
(B) the production from which was to begin in reasonable commercial quantities after December 20, 1991 in accordance with an agreement in writing made before December 21, 1991, and
(b) in any other case, the lesser of one and the amount determined by the formula
C / D
where
- C
- is the amount that would be the partnership’s adjusted resource profits for the fiscal period if the partnership did not have any working interest described in subparagraph (a)(ii), and
- D
- is the partnership’s adjusted resource profits for the fiscal period.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- SOR/81-974, s. 9
- SOR/85-174, s. 9
- SOR/90-113, s. 7
- SOR/91-79, s. 9
- SOR/93-120, s. 2
- SOR/94-686, ss. 58(F), 78(F)
- SOR/96-451, s. 5
- SOR/99-179, s. 8
- Date modified: