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(a) the assistance that the corporation has
received, is entitled to receive, or can
reasonably be expected to receive at any
time, and that can reasonably be related to
the specified expenses or to Canadian
development activities to which the
specified expenses relate (other than
assistance that can reasonably be related to
expenses referred to in paragraph (b) or
(b.1) ),
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(b) all specified expenses that are
prescribed Canadian exploration and
development overhead expenses of the
corporation,
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(12) Subsection 66(12.62) of the Act is
amended by adding the following after
paragraph (b):
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(b.1) all specified expenses that are
described in paragraph (e) of the definition
``Canadian development expense'' in
subsection 66.2(5) or that are described in
paragraph (f) of that definition because of
the reference in the latter paragraph to
paragraph (e), and
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(13) Paragraph 66(12.62)(d) of the Act is
replaced by the following:
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(d) exceeding the amount, if any, by which
the consideration for the share exceeds the
total of other amounts renounced in respect
of the share under this subsection or
subsection (12.6) or (12.601) on or before
the day on which the renunciation is made,
or
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(14) The portion of subsection 66(12.63)
of the Act before paragraph (a) is replaced
by the following:
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| Effect of
renunciation
|
(12.63) Subject to subsections (12.691) to
(12.702) , where under subsection (12.62) a
corporation renounces an amount to a person,
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(15) Subsections 66(12.64) and (12.65) of
the Act are repealed.
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(16) Paragraph 66(12.66)(a) of the Act is
replaced by the following:
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(a) a corporation that issues a flow-through
share to a person under an agreement
incurs, in a particular calendar year,
Canadian exploration expenses or
Canadian development expenses,
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(a.1) the agreement was made in the
preceding calendar year,
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(17) Paragraph 66(12.66)(b) of the Act is
replaced by the following:
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(i) are described in paragraph (a), (d) or
(f) of the definition ``Canadian
exploration expense'' in subsection
66.1(6) or paragraph (a) or (b) of the
definition ``Canadian development
expense'' in subsection 66.2(5),
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(ii) would be described in paragraph (h)
of the definition ``Canadian exploration
expense'' in subsection 66.1(6) if the
words ``paragraphs (a), (b), (c), (d), (f)
and (g)'' were read as ``paragraphs (a),
(d) and (f)'', or
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(iii) would be described in paragraph (f)
of the definition ``Canadian development
expense'' in subsection 66.2(5) if the
words ``any of paragraphs (a) to (e)''
were read as ``paragraph (a) or (b)'',
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(18) Paragraphs 66(12.66)(c), (d) and (e)
of the Act are replaced by the following:
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(c) before the end of that preceding year the
person paid the consideration in money for
the share to be issued ,
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(d) the corporation and the person deal with
each other at arm's length throughout the
particular year , and
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(e) in January, February or March of the
particular year, the corporation renounces
an amount in respect of the expenses to the
person in respect of the share in accordance
with subsection (12.6) or (12.601) and the
effective date of the renunciation is the last
day of that preceding year,
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(19) Paragraph 66(12.67)(a) of the Act is
replaced by the following:
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(a) not to have renounced under any of
subsections (12.6), (12.601) and (12.62)
any expenses that are deemed to have been
incurred by it because of a renunciation
under this section by another corporation
that is not related to it;
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(20) The portion of paragraph
66(12.671)(c) of the Act before
subparagraph (i) is replaced by the
following:
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(c) with the partnership if any part of the
amount renounced would, but for
subsection (12.7001) , be included, because
of paragraph (h) of the definition
``Canadian exploration expense'' in
subsection 66.1(6), in the Canadian
exploration expense of
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(21) Subsection 66(12.69) of the Act is
replaced by the following:
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| Filing re
partners
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(12.69) Where, in a fiscal period of a
partnership, an expense is incurred by the
partnership as a consequence of a renunciation
of an amount under subsection (12.6),
(12.601) or (12.62), the partnership shall,
before the end of the third month that begins
after the end of the period, file with the
Minister a prescribed form identifying the
share of the expense attributable to each
member of the partnership at the end of the
period.
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| Consequences
of failure to
file
|
(12.6901) Where a partnership fails to file
a prescribed form as required under
subsection (12.69) in respect of an expense,
except for the purpose of subsection (12.69)
the partnership is deemed not to have incurred
the expense.
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(22) The portion of subsection 66(12.691)
of the Act before paragraph (a) is replaced
by the following:
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| Filing re
assistance
|
(12.691) Where a partnership receives or
becomes entitled to receive assistance as an
agent for its members or former members at a
particular time in respect of any Canadian
exploration expense or Canadian
development expense that is or, but for
paragraph (12.61)(b) or (12.63)(b), would be
incurred by a corporation, the following rules
apply:
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(23) Subsections 66(12.7) to (12.73) of the
Act are replaced by the following:
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| Filing re
renunciation
|
(12.7) Where a corporation renounces an
amount in respect of Canadian exploration
expenses or Canadian development expenses
under subsection (12.6), (12.601) or (12.62),
the corporation shall file a prescribed form in
respect of the renunciation with the Minister
before the end of the first month after the
month in which the renunciation is made.
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| Consequences
of failure to
file
|
(12.7001) Where a corporation fails to file
a prescribed form as required under
subsection (12.7) in respect of a renunciation
of an amount , subsections (12.61) and (12.63)
do not apply in respect of the amount.
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| Filing re
assistance
|
(12.701) Where a corporation receives or
becomes entitled to receive assistance as an
agent in respect of any Canadian exploration
expense or Canadian development expense
that is or, but for paragraph (12.61)(b) or
(12.63)(b), would be incurred by the
corporation, the corporation shall, before the
end of the first month after the particular
month in which it first becomes known to the
corporation that a person that holds a
flow-through share of the corporation is
entitled to a share of any part of the assistance,
file with the Minister a prescribed form
identifying the share of the assistance to
which each of those persons is entitled at the
end of the particular month.
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| Consequences
of failure to
file
|
(12.702) Where a corporation fails to file a
prescribed form as required under subsection
(12.701) in respect of assistance, except for
the purpose of subsection (12.701) the
Canadian exploration expense or Canadian
development expense to which the assistance
relates is deemed not to have been incurred by
the corporation.
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| Restriction on
renunciation
|
(12.71) A corporation may renounce an
amount under subsection (12.6), (12.601) or
(12.62) in respect of Canadian exploration
expenses or Canadian development expenses
incurred by it only to the extent that, but for the
renunciation, it would be entitled to a
deduction in respect of the expenses in
computing its income.
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| Reductions in
renunciations
|
(12.73) Where an amount that a corporation
purports to renounce to a person under
subsection (12.6), (12.601) or (12.62) exceeds
the amount that it can renounce to the person
under that subsection,
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(a) the corporation shall file a statement
with the Minister in prescribed form where
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(i) the Minister sends a notice in writing
to the corporation demanding the
statement, or
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(ii) the excess arose as a consequence of
a renunciation purported to be made in a
calendar year under subsection (12.6) or
(12.601) because of the application of
subsection (12.66) and, at the end of the
year, the corporation knew or ought to
have known of all or part of the excess;
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(b) where subparagraph (a)(i) applies, the
statement shall be filed not later than 30
days after the Minister sends a notice in
writing to the corporation demanding the
statement;
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(c) where subparagraph (a)(ii) applies, the
statement shall be filed before March of the
calendar year following the calendar year in
which the purported renunciation was
made;
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(d) except for the purpose of Part XII.6, any
amount that is purported to have been so
renounced to any person is deemed, after
the statement is filed with the Minister, to
have always been reduced by the portion of
the excess identified in the statement in
respect of that purported renunciation; and
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(e) where a corporation fails in the
statement to apply the excess fully to reduce
one or more purported renunciations, the
Minister may at any time reduce the total
amount purported to be renounced by the
corporation to one or more persons by the
amount of the unapplied excess in which
case, except for the purpose of Part XII.6,
the amount purported to have been so
renounced to a person is deemed, after that
time, always to have been reduced by the
portion of the unapplied excess allocated by
the Minister in respect of that person.
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(24) The portion of subsection 66(12.741)
of the Act before paragraph (a) is replaced
by the following:
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| Late
renunciation
|
(12.741) Where a corporation purports to
renounce an amount under subsection (12.6),
(12.601) or (12.62) after the period in which
the corporation was entitled to renounce the
amount, the amount is deemed, except for the
purposes of this subsection and subsections
(12.7) and (12.75), to have been renounced at
the end of the period if
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(25) Subparagraph 66(12.75)(a)(ii) of the
Act is replaced by the following:
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(ii) 1/4 of 1% of the maximum amount in
respect of the Canadian exploration
expenses and Canadian development
expenses renounced or attributed or to be
renounced or attributed as set out in the
document;
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(26) Paragraphs (a) and (b) of the
definition ``flow-through share'' in
subsection 66(15) of the Act are replaced by
the following:
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(a) to incur, in the period that begins on
the day the agreement was made and
ends 24 months after the end of the
month that includes that day, Canadian
exploration expenses or Canadian
development expenses in an amount not
less than the consideration for which the
share is to be issued, and
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(b) to renounce, before March of the first
calendar year that begins after that
period, in prescribed form to the person
in respect of the share, an amount in
respect of the Canadian exploration
expenses or Canadian development
expenses so incurred by it not exceeding
the consideration received by the
corporation for the share,
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(27) The definition ``foreign exploration
and development expenses'' in subsection
66(15) of the Act is amended by adding the
following after paragraph (e):
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(f) any amount included at any time in the
capital cost to the taxpayer of any
depreciable property of a prescribed
class,
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(g) an expenditure incurred at any time
after the commencement of production
from a foreign resource property of the
taxpayer in order to evaluate the
feasibility of a method of recovery of
petroleum, natural gas or related
hydrocarbons from the portion of a
natural reservoir to which the foreign
resource property relates,
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(h) an expenditure (other than a drilling
expense) incurred at any time after the
commencement of production from a
foreign resource property of the taxpayer
in order to assist in the recovery of
petroleum, natural gas or related
hydrocarbons from the portion of a
natural reservoir to which the foreign
resource property relates, or
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(i) an expenditure incurred at any time
relating to the injection of any substance
to assist in the recovery of petroleum,
natural gas or related hydrocarbons from
a natural reservoir;
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(28) The definition ``principal-business
corporation'' in subsection 66(15) of the Act
is amended by striking out the word ``and''
at the end of paragraph (f.1) and by adding
the following after paragraph (g):
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(h) the generation of energy using
property described in Class 43.1 of
Schedule II to the Income Tax
Regulations, and
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(i) the development of projects for which
it is reasonable to expect that at least 50%
of the capital cost of the depreciable
property to be used in each project would
be the capital cost of property described
in Class 43.1 of Schedule II to the Income
Tax Regulations,
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(29) Subsection 66(16) of the Act is
replaced by the following:
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| Partnerships
|
(16) For the purposes of subsections (12.6)
to (12.73) , the definitions ``assistance'' and
``flow-through share'' in subsection (15) and
subsections (18), (19) and 66.3(3) and (4), a
partnership is deemed to be a person and its
taxation year is deemed to be its fiscal period.
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(30) Subsection 66(18) of the Act is
replaced by the following:
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| Members of
partnerships
|
(18) For the purposes of this section,
subsection 21(2), sections 59.1 and 66.1 to
66.7, paragraph (d) of the definition
``investment expense'' in subsection 110.6(1)
and the descriptions of C and D in subsection
211.91(1) , where a person's share of an outlay
or expense made or incurred by a partnership
in a fiscal period of the partnership is included
in respect of the person under paragraph (d) of
the definition ``foreign exploration and
development expenses'' in subsection (15),
paragraph (h) of the definition ``Canadian
exploration expense'' in subsection 66.1(6),
paragraph (f) of the definition ``Canadian
development expense'' in subsection 66.2(5)
or paragraph (b) of the definition ``Canadian
oil and gas property expense'' in subsection
66.4(5), the portion of the outlay or expense so
included is deemed, except for the purposes of
applying the definitions ``foreign exploration
and development expenses'', ``Canadian
exploration expense'', ``Canadian
development expense'' and ``Canadian oil and
gas property expense'' in respect of the
person, to be made or incurred by the person
at the end of that fiscal period.
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(31) Subsection 66(19) of the Act is
replaced by the following:
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| Renunciation
by corporate
partner, etc.
|
(19) A corporation is not entitled to
renounce under subsection (12.6), (12.601) or
(12.62) to a person a specified amount in
respect of the corporation where the
corporation would not be entitled to so
renounce the specified amount if
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(a) the expression ``end of that fiscal
period'' in subsection (18) were read as
``time the outlay or expense was made or
incurred by the partnership''; and
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(b) the expression ``on the effective date of
the renunciation'' in each of paragraphs
(12.61)(a) and (12.63)(a) were read as ``at
the earliest time that any part of such
expense was incurred by the corporation''.
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| Specified
amount
|
(20) For the purpose of subsection (19), a
specified amount in respect of a corporation is
an amount that represents
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(a) all or part of the corporation's share of
an outlay or expense made or incurred by a
partnership of which the corporation is a
member or former member; or
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(b) all or part of an amount renounced to the
corporation under subsection (12.6),
(12.601) or (12.62).
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(32) Subsection (1) applies to
renunciations made
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(a) after 2006, in respect of a payment or
loan received by a joint exploration
corporation before March 6, 1996;
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(b) after 2006, in respect of a payment or
loan received by a joint exploration
corporation after March 5, 1996 under
an agreement in writing made
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(i) by the corporation before March 6,
1996, or
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(ii) by another corporation before
March 6, 1996, where
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(A) the other corporation controlled
the corporation at the time the
agreement was made, or
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(B) the other corporation
undertook, at the time the
agreement was made, to form the
corporation; and
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(c) after March 5, 1996, in any other case.
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(33) Subsections (2) and (11) apply to
expenses incurred after February 1996.
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(34) Subsection (3) applies to costs
incurred after March 5, 1996, other than
costs incurred under an agreement in
writing made before March 6, 1996.
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(35) Subsections (4), (8), (10), (13), (14)
and (19) to (22), subsections 66(12.7) to
(12.71) of the Act, as enacted by subsection
(23), and subsections (24) to (26) and (31)
apply to renunciations made after 1998.
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(36) Subsections (5), (9), (12) and (15)
apply to renunciations made after March 5,
1996, other than a renunciation made
before 1999 in respect of consideration
given
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(a) before March 6, 1996; or
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(b) under an agreement in writing made
before March 6, 1996 or under the terms
of a prospectus, preliminary prospectus,
registration statement, offering
memorandum or notice filed before
March 6, 1996 with a public authority in
Canada in accordance with securities
legislation of a province.
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