Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Consideration for foreign resource property

• 59. (1) Where a taxpayer has disposed of a foreign resource property, there shall be included in computing the taxpayer’s income for a taxation year the amount, if any, by which

  • (a) the portion of the taxpayer’s proceeds of disposition from the disposition of the property that becomes receivable in the year

  exceeds

  • (b) the total of

    • (i) all amounts each of which is an outlay or expense made or incurred by the taxpayer for the purpose of making the disposition that was not otherwise deductible for the purposes of this Part, and

    • (ii) where the property is a foreign resource property in respect of a country, the amount designated under this subparagraph in prescribed form filed with the taxpayer’s return of income for the year in respect of the disposition.

• Marginal note:Partnerships

  (1.1) Where a taxpayer is a member of a partnership in a fiscal period of the partnership, the taxpayer’s share of the amount that would be included under subsection (1) in respect of a disposition of a foreign resource property in computing the partnership’s income for a taxation year if the partnership were a person, the fiscal period were a taxation year, subsection (1) were read without reference to subparagraph (1)(b)(ii) and section 96 were read without reference to paragraph 96(1)(d) is deemed to be proceeds of disposition that become receivable by the taxpayer at the end of the fiscal period in respect of a disposition of the property by the taxpayer.

• Marginal note:Deduction under former s. 64 in preceding year

  (2) There shall be included in computing a taxpayer’s income for a taxation year any amount that has been deducted as a reserve under subsection 64(1), (1.1) or (1.2) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in computing the taxpayer’s income for the immediately preceding taxation year.

• Marginal note:Recovery of exploration and development expenses

  (3.2) There shall be included in computing a taxpayer’s income for a taxation year

  • (a) any amount referred to in paragraph 66(12.4)(b);

  • (b) any amount referred to in subsection 66.1(1);

  • (c) any amount referred to in subsection 66.2(1);

  • (c.1) any amount referred to in subsection 66.21(3);

  • (d) any amount referred to in subparagraph 66(10.4)(b)(ii); and

  • (e) any amount referred to in paragraph 66(10.4)(c).

• Marginal note:Amounts to be included in income

  (3.3) There shall be included in computing a taxpayer’s income for a taxation year

  • (a) 33 1/3% of the total of all amounts, each of which is the stated percentage of

    • (i) an amount that became receivable by the taxpayer after December 31, 1983 and in the year (other than an amount that would have been a Canadian oil and gas exploration expense if it had been an expense incurred by the taxpayer at the time it became receivable),

    • (ii) an amount that became receivable by the taxpayer after December 31, 1983 and in the year that would have been a Canadian oil and gas exploration expense described in paragraph (c) or (d) of the definition “Canadian exploration expense” in subsection 66.1(6) in respect of a qualified tertiary oil recovery project if it had been an expense incurred by the taxpayer at the time it became receivable, or

    • (iii) 30% of an amount that became receivable by the taxpayer in the year and in 1984 that would have been a Canadian oil and gas exploration expense (other than an expense described in paragraph (c) of the definition “Canadian exploration expense” in subsection 66.1(6) in respect of a qualified tertiary oil recovery project) incurred in respect of non-conventional lands if it had been an expense incurred by the taxpayer at the time it became receivable

    and in respect of which the consideration given by the taxpayer was a property (other than a share, depreciable property of a prescribed class or a Canadian resource property) or services the cost of which may reasonably be regarded as having been an expenditure that was added in computing the earned depletion base of the taxpayer or in computing the earned depletion base of a predecessor where the taxpayer is a successor corporation to the predecessor;

  • (b) 33 1/3% of the total of all amounts, each of which is the stated percentage of an amount in respect of a disposition of depreciable property of a prescribed class (other than a disposition of such property that had been used by the taxpayer to any person with whom the taxpayer was not dealing at arm’s length) of the taxpayer after December 11, 1979 and in the year, the capital cost of which was added in computing the earned depletion base of the taxpayer or of a person with whom the taxpayer was not dealing at arm’s length or in computing the earned depletion base of a predecessor where the taxpayer is a successor corporation to the predecessor, that is equal to the lesser of

    • (i) the proceeds of disposition of the property, and

    • (ii) the capital cost of the property to the taxpayer, the person with whom the taxpayer was not dealing at arm’s length or the predecessor, as the case may be, computed as if no amount had been added thereto by virtue of paragraph 21(1)(b) or subsection 21(3);

  • (c) 33 1/3% of the total of all amounts, each of which is an amount in respect of a disposition of depreciable property of a prescribed class that is bituminous sands equipment (other than a disposition of such property that had been used by the taxpayer to any person with whom the taxpayer was not dealing at arm’s length) of the taxpayer after December 11, 1979 and before 1990 and in the year, the capital cost of which was added in computing the supplementary depletion base of the taxpayer or of a person with whom the taxpayer was not dealing at arm’s length or in computing the supplementary depletion base of a predecessor where the taxpayer is a successor corporation to the predecessor, that is equal to the lesser of

    • (i) the proceeds of disposition of the property, and

    • (ii) the capital cost of the property to the taxpayer, the person with whom the taxpayer was not dealing at arm’s length or the predecessor, as the case may be, computed as if no amount had been added thereto by virtue of paragraph 21(1)(b) or subsection 21(3);

  • (d) 50% of the total of all amounts, each of which is an amount in respect of a disposition of depreciable property of a prescribed class that is enhanced recovery equipment (other than a disposition of such property that had been used by the taxpayer to any person with whom the taxpayer was not dealing at arm’s length) of the taxpayer after December 11, 1979 and before 1990 and in the year, the capital cost of which was added in computing the supplementary depletion base of the taxpayer or of a person with whom the taxpayer was not dealing at arm’s length or in computing the supplementary depletion base of a predecessor where the taxpayer is a successor corporation to the predecessor, that is equal to the lesser of

    • (i) the proceeds of disposition of the property, and

    • (ii) the capital cost of the property to the taxpayer, the person with whom the taxpayer was not dealing at arms’ length or the predecessor, as the case may be, computed as if no amount had been added thereto by virtue of paragraph 21(1)(b) or subsection 21(3);

  • (e) 66 2/3% of the total of all amounts, each of which is an amount that became receivable by the taxpayer after December 11, 1979 and before 1990 and in the year and in respect of which the consideration given by the taxpayer was a property (other than a share or a Canadian resource property) or services the cost of which may reasonably be regarded as having been an expenditure in connection with an oil or gas well in respect of which an amount was included in computing the taxpayer’s frontier exploration base or in computing the frontier exploration base of a predecessor where the taxpayer is a successor corporation to the predecessor; and

  • (f) 33 1/3% of the total of all amounts, each of which is the stated percentage of an amount that became receivable by the taxpayer after April 19, 1983 and in the year and in respect of which the consideration given by the taxpayer was a property (other than a share, depreciable property of a prescribed class or a Canadian resource property) or services the cost of which may reasonably be regarded as having been an expenditure that was included in computing the mining exploration depletion base of the taxpayer or in computing the mining exploration depletion base of a specified predecessor of the taxpayer.

• Marginal note:Definitions

  (3.4) For the purposes of this subsection and subsection 59(3.3),

  “specified predecessor”

  « prédécesseur déterminé »

  “specified predecessor” of a taxpayer means a person who is a predecessor of

  • (a) the taxpayer, or

  • (b) a person who is a specified predecessor of the taxpayer;

  “stated percentage”

  « pourcentage indiqué »

  “stated percentage” means

  • (a) in respect of an amount described in paragraph 59(3.3)(a) or 59(3.3)(f) that became receivable by a taxpayer,

    • (i) 100% where the amount became receivable before July, 1988,

    • (ii) 50% where the amount became receivable after June, 1988 and before 1990, and

    • (iii) 0% where the amount became receivable after 1989, and

  • (b) in respect of the disposition described in paragraph 59(3.3)(b) of a depreciable property of a taxpayer,

    • (i) 100% where the property was disposed of before July, 1988,

    • (ii) 50% where the property was disposed of after June, 1988 and before 1990, and

    • (iii) 0% where the property was disposed of after 1989;

  “successor corporation”

  « société remplaçante »

  “successor corporation” means a corporation that has at any time after November 7, 1969 acquired, by purchase, amalgamation, merger, winding-up or otherwise (other than pursuant to an amalgamation that is described in subsection 87(1.2) or a winding-up to which the rules in subsection 88(1) apply), from another person (in this subsection and subsection 59(3.3) referred to as the “predecessor”) all or substantially all of the Canadian resource properties of the predecessor in circumstances in which any of subsection 29(25) of the Income Tax Application Rules and subsections 66.7(1) and 66.7(3) to 66.7(5) apply to the corporation.

• Marginal note:Variation of stated percentage

  (3.5) Notwithstanding the definition “stated percentage” in subsection 59(3.4), where

  • (a) an amount became receivable by a taxpayer within 60 days after the end of 1989 in respect of a disposition of property or services, and

  • (b) the person to whom the disposition was made is a corporation that, before the end of 1989, had issued, or had undertaken to issue, a flow-through share and the corporation renounces under subsection 66(12.66), effective on December 31, 1989, an amount in respect of Canadian exploration expenses that includes an expenditure in respect of the amount referred to in paragraph 59(3.5)(a),

  the stated percentage in respect of the amount described in paragraph 59(3.5)(a) shall be 50%.

• Definition of “proceeds of disposition”

  (5) In this section, “proceeds of disposition” has the meaning assigned by section 54.

• Marginal note:Definitions in regulations under s. 65

  (6) In this section, “bituminous sands equipment”,“Canadian oil and gas exploration expense”, “earned depletion base”, “enhanced recovery equipment”, “frontier exploration base”, “mining exploration depletion base”, “non-conventional lands”, “qualified tertiary oil recovery project” and “supplementary depletion base” have the meanings assigned by regulations made for the purposes of section 65.