(iii) drilling by rotary, diamond, percussion or other methods, or
	(iv) trenching, digging test pits and preliminary sampling,
	(c) the cost to the taxpayer of any of the taxpayer's foreign resource property in respect of that country,
	(d) any annual payment made by the taxpayer for the preservation of a foreign resource property in respect of that country, and
	(e) subject to section 66.8, the taxpayer's share of an expense, cost or payment referred to in any of paragraphs (a) to (d) that is made or incurred by a partnership in a fiscal period of the partnership that begins after 2000 if, at the end of that period, the taxpayer was a member of the partnership
	but does not include
	(f) an expenditure that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class,
	(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,
	(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,
	(i) an expenditure, incurred at any time, that relates to the injection of any substance to assist in the recovery of petroleum, natural gas or related hydrocarbons from a natural reservoir,
	(j) an expenditure incurred by the taxpayer, unless the expenditure was made
	(i) for the acquisition of foreign resource property by the taxpayer, or
	(ii) for the purpose of
	(A) enhancing the value of foreign resource property that the taxpayer owned at the time the expenditure was incurred or that the taxpayer had a reasonable expectation of owning after that time, or
	(B) assisting in evaluating whether a foreign resource property is to be acquired by the taxpayer, or
	(k) the taxpayer's share of any cost or expenditure referred to in any of paragraphs (f) to (j) that is incurred by a partnership.
``foreign resource income'' « revenu provenant de ressources à l'étranger »	``foreign resource income'' of a taxpayer for a taxation year, in respect of a country other than Canada, means the total of
	(a) that part of the taxpayer's income for the year, determined without reference to subsections (4) and 66(4), that is reasonably attributable to
	(i) the production of petroleum or natural gas from natural accumulations of petroleum or natural gas in that country or from oil or gas wells in that country, or
	(ii) the production of minerals from mines in that country;
	(b) the taxpayer's income for the year from royalties in respect of a natural accumulation of petroleum or natural gas in that country, an oil or gas well in that country or a mine in that country, determined without reference to subsections (4) and 66(4); and
	(c) all amounts each of which is an amount, in respect of a foreign resource property in respect of that country that has been disposed of by the taxpayer, equal to the amount, if any, by which
	(i) the amount included in computing the taxpayer's income for the year by reason of subsection 59(1) in respect of that disposition
	exceeds
	(ii) the total of all amounts each of which is that portion of an amount deducted under subsection 66.7(2) in computing the taxpayer's income for the year that
	(A) can reasonably be considered to be in respect of the foreign resource property, and
	(B) cannot reasonably be considered to have reduced the amount otherwise determined under paragraph (a) or (b) in respect of the taxpayer for the year.
``foreign resource loss'' « perte résultant de ressources à l'étranger »	``foreign resource loss'' of a taxpayer for a taxation year in respect of a country other than Canada means the taxpayer's loss for the year in respect of the country determined in accordance with the definition ``foreign resource income'' with such modifications as the circumstances require.
``global foreign resource limit'' « limite globale des frais relatifs à des ressources à l'étranger »	``global foreign resource limit'' of a taxpayer for a taxation year means the amount that is the lesser of
	(a) the amount, if any, by which
	(i) the amount determined under subparagraph 66(4)(b)(ii) in respect of the taxpayer for the year
	exceeds the total of
	(ii) the total of all amounts each of which is the maximum amount that the taxpayer would be permitted to deduct, in respect of a country, under subsection (4) in computing the taxpayer's income for the year if, in its application to the year, subsection (4) were read without reference to paragraph (4)(b), and
	(iii) the amount deducted for the year under subsection 66(4) in computing the taxpayer's income for the year; and
	(b) the amount, if any, by which
	(i) 30% of the total of all amounts each of which is, at the end of the year, the taxpayer's adjusted cumulative foreign resource expense in respect of a country
	exceeds
	(ii) the total described in subparagraph (a)(ii).
Application of subsection 66(15)	(2) The definitions in subsection 66(15) apply in this section.
Amount to be included in income	(3) For the purpose of paragraph 59(3.2)(c.1), the amount referred to in this subsection in respect of a taxpayer for a taxation year is the amount, if any, by which
	(a) the total of all amounts referred to in the descriptions of E to J in the definition ``cumulative foreign resource expense'' in subsection (1) that are deducted in computing the taxpayer's cumulative foreign resource expense at the end of the year in respect of a country
	exceeds the total of
	(b) the total of all amounts referred to in the descriptions of A to D in the definition ``cumulative foreign resource expense'' in subsection (1) that are included in computing the taxpayer's cumulative foreign resource expense at the end of the year in respect of the country, and
	(c) the total determined under paragraph 66.7(13.2)(a) for the year in respect of the taxpayer and the country.
Deduction for cumulative foreign resource expense	(4) In computing a taxpayer's income for a taxation year throughout which the taxpayer is resident in Canada, the taxpayer may deduct the amount claimed by the taxpayer, in respect of a country other than Canada, not exceeding the total of
	(a) the greater of
	(i) 10% of a particular amount equal to the taxpayer's adjusted cumulative foreign resource expense in respect of the country at the end of the year, and
	(ii) the least of
	(A) if the taxpayer ceased to be resident in Canada immediately after the end of the year, the particular amount,
	(B) if clause (A) does not apply, 30% of the particular amount,
	(C) the amount, if any, by which the taxpayer's foreign resource income for the year in respect of the country exceeds the portion of the amount, deducted under subsection 66(4) in computing the taxpayer's income for the year, that applies to a source in the country, and
	(D) the amount, if any, by which
	(I) the total of all amounts each of which is the taxpayer's foreign resource income for the year in respect of a country
	exceeds the total of
	(II) all amounts each of which is the taxpayer's foreign resource loss for the year in respect of a country, and
	(III) the amount deducted under subsection 66(4) in computing the taxpayer's income for the year, and
	(b) the lesser of
	(i) the amount, if any, by which the particular amount exceeds the amount determined for the year under paragraph (a) in respect of the taxpayer, and
	(ii) that portion of the taxpayer's global foreign resource limit for the year that is designated for the year by the taxpayer, in respect of that country and no other country, in prescribed form filed with the Minister with the taxpayer's return of income for the year.
Individual changing residence	(5) Where at any time in a taxation year an individual becomes or ceases to be resident in Canada,
	(a) subsection (4) applies to the individual as if the year were the period or periods in the year throughout which the individual was resident in Canada; and
	(b) for the purpose of applying this section, subsection 66(13.1) does not apply to the individual for the year.
	(2) Subsection (1) applies to taxation years that begin after 2000.
	48. (1) The definitions ``disposition'' and ``proceeds of disposition'' in subsection 66.4(5) of the Act are replaced by the following:
``proceeds of disposition'' « produit de disposition »	``proceeds of disposition'' has the meaning assigned by section 54.
	(2) Subsection (1) applies to transactions and events that occur after December 23, 1998.
	49. (1) Subparagraph 66.7(2)(a)(i) of the Act is replaced by the following:
	(i) the foreign exploration and development expenses incurred by the original owner before the original owner disposed of the particular property to the extent that those expenses were incurred when the original owner was resident in Canada, were not otherwise deducted in computing the successor's income for the year, were not deducted in computing the successor's income for a preceding taxation year and were not deductible by the original owner, nor deducted by any predecessor owner of the particular property, in computing income for any taxation year
	(2) Section 66.7 of the Act is amended by adding the following after subsection (2):
Country-by-c ountry successor FEDE allocations	(2.1) For greater certainty, the portion of an amount deducted under subsection (2) in computing a taxpayer's income for a taxation year that can reasonably be considered to be in respect of specified foreign exploration and development expenses of the taxpayer in respect of a country is considered to apply to a source in that country.
Method of allocation	(2.2) For the purpose of subsection (2.1), where a taxpayer has incurred specified foreign exploration and development expenses in respect of two or more countries, an allocation to each of those countries for a taxation year shall be determined in a manner that is
	(a) reasonable having regard to all the circumstances, including the level and timing of
	(i) the taxpayer's specified foreign exploration and development expenses in respect of the country, and
	(ii) the profits or gains to which those expenses relate; and
	(b) not inconsistent with the allocation made under subsection (2.1) for the preceding taxation year.
Successor of foreign resource expenses	(2.3) Subject to subsections (6) and (8), where a corporation (in this subsection referred to as the ``successor'') acquired a particular foreign resource property in respect of a country (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
	(a) 30% of the amount, if any, by which
	(i) the cumulative foreign resource expense, in respect of the country, of the original owner determined immediately after the disposition of the particular property by the original owner to the extent that it has not been
	(A) deducted by the original owner or any predecessor owner of the particular property in computing income for any taxation year,
	(B) otherwise deducted in computing the income of the successor for the year, or
	(C) deducted by the successor in computing its income for any preceding taxation year
	exceeds the total of
	(ii) all amounts each of which is an amount (other than any portion of the amount that can reasonably be considered to result in a reduction of the amount otherwise determined under this paragraph in respect of another original owner of a relevant resource property who is not a predecessor owner of a relevant resource property or who became a predecessor owner of a relevant resource property before the original owner became a predecessor owner of a relevant resource property) that became receivable by a predecessor owner of the particular property, or by the successor in the year or a preceding taxation year, and that
	(A) was included by the predecessor owner or the successor in computing an amount determined under paragraph (a) of the description of F in the definition ``cumulative foreign resource expense'' in subsection 66.21(1) at the end of the year, and
	(B) can reasonably be regarded as attributable to the disposition of a property (in this subparagraph referred to as a ``relevant resource property'') that is
	(I) the particular property, or
	(II) another foreign resource property in respect of the country that was acquired from the original owner with the particular property by the successor or a predecessor owner of the particular property, and
	(iii) all amounts each of which is an amount by which the amount described in this paragraph is required by reason of subsection 80(8) to be reduced at or before the end of the year, and
	(b) the amount, if any, by which the total of
	(i) the part of the successor's income for the year that can reasonably be regarded as attributable to production from the particular property, computed as if no deduction were permitted under section 29 of the Income Tax Application Rules, this section or any of sections 65 to 66.5, except that, where the successor acquired the particular property from the original owner at any time in the year (otherwise than by way of an amalgamation or merger or solely by reason of the application of paragraph (10)(c)) and did not deal with the original owner at arm's length at that time, the amount determined under this subparagraph is deemed to be nil, and
	(ii) unless the amount determined under subparagraph (i) is nil by reason of the exception provided under that subparagraph, the lesser of