Income Tax Regulations

700 (1) Except as provided in subsection (2), for the purposes of paragraph 127(2)(a) of the Act income for the year from logging operations in the province means the aggregate of

• (a) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer and the logs so obtained are sold by the taxpayer in the province before or on delivery to a sawmill, pulp or paper plant or other place for processing logs, the taxpayer’s income for the year from the sale, other than any portion thereof that was included in computing the taxpayer’s income from logging operations in the province for a previous year;

• (b) where standing timber in the province or the right to cut standing timber in the province is sold by the taxpayer, the taxpayer’s income for the year from the sale, other than any portion thereof that was included in computing the taxpayer’s income from logging operations in the province for a previous year;

• (c) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer, if the logs so obtained are

  • (i) exported from the province and are sold by him prior to or on delivery to a sawmill, pulp or paper plant or other place for processing logs, or

  • (ii) exported from Canada,

  the amount computed by deducting from the value, as determined by the province, of the logs so exported in the year, the aggregate of the costs of acquiring, cutting, transporting and selling the logs; and

• (d) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer, if the logs are processed by the taxpayer or by a person on his behalf in a sawmill, pulp or paper plant or other place for processing logs in Canada, the income of the taxpayer for the year from all sources minus the aggregate of

  • (i) his income from sources other than logging operations carried on in Canada and other than the processing in Canada by him or on his behalf and sale by him of logs, timber and products produced therefrom,

  • (ii) each amount included in the aggregate determined under this subsection by virtue of paragraph (a), (b) or (c), and

  • (iii) an amount equal to eight per cent of the original cost to him of properties described in Schedule II used by him in the year in the processing of logs or products derived therefrom or, if the amount so determined is greater than 65 per cent of the income remaining after making the deductions under subparagraphs (i) and (ii), 65 per cent of the income so remaining or, if the amount so determined is less than 35 per cent of the income so remaining, 35 per cent of the income so remaining.

(2) Where the taxpayer cuts standing timber or acquires logs cut from standing timber in more than one province, for the purposes of paragraph 127(2)(a) of the Act income for the year from logging operations in the province means the aggregate of

• (a) the amounts determined in respect of that province in accordance with paragraphs (1)(a), (b) and (c); and

• (b) where the logs are processed by the taxpayer or by a person on his behalf in a sawmill, pulp or paper plant or other place for processing logs in Canada, an amount equal to the proportion of the income of the taxpayer for the year from all sources minus the aggregate of

  • (i) his income from sources other than logging operations carried on in Canada and other than the processing in Canada by him or on his behalf and sale by him of logs, timber and products produced therefrom,

  • (ii) the aggregate of amounts determined in respect of each province in accordance with paragraphs (1)(a), (b) and (c), and

  • (iii) an amount equal to eight per cent of the original cost to him of properties described in Schedule II used by him in the year in the processing of logs or products derived therefrom or, if the amount so determined is greater than 65 per cent of the income remaining after making the deductions under subparagraphs (i) and (ii), 65 per cent of the income so remaining or, if the amount so determined is less than 35 per cent of the income so remaining, 35 per cent of the income so remaining,

  that

  • (iv) the quantity of standing timber cut in the province in the year by the taxpayer and logs cut from standing timber in the province acquired by the taxpayer in the year,

  is of

  • (v) the total quantity of standing timber cut and logs acquired in the year by the taxpayer.

(3) For the purpose of the definition logging tax in subsection 127(2) of the Act, each of the following is declared to be a tax of general application on income from logging operations:

• (a) the tax imposed by the Province of British Columbia under the Logging Tax Act, R.S.B.C. 1996, c. 277; and

• (b) the tax imposed by the Province of Quebec under Part VII of the Taxation Act, R.S.Q., c. I-3.