,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,cr[n ,*>ges--,res\rce ,prop]ties 9
  ,canada
,numb]3 ,,it-#dch;,r#b
,date3 ,april #ba1 #aiie
,ref];e3 ,p>agraphs #ab7#a77o7 &
  #ah7#a77m7 7al sec;n #hj.b1 subsec;ns
  #ff.b7#b71 #ff.d7#b71 #fi7#f7 to 7#aj7
  & #bad7#a71 p>agraph #bab7#a77d71 !
  def9i;n 8,canadian develop;t exp5se0 9
  subsec;n #ff.b7#e7 &! def9i;n
  8,canadian oil & gas prop]ty exp5se0 9
  subsec;n #ff.d7#e7 (! ,9come ,tax
  ,act1 & sec;ns #hje & #abaa (! ,9come
  ,tax ,regul,ns7

               ,applic,n
    
  ,? bullet9 c.els & replaces ,9t]pret,n
,bullet9 ,,it-#dch;,r1 ,9come ,f      #a
             ,,it-#dch;,r#b          a#a
,oil or ,gas ,wells or ,m9]al ,res\rces
--,cr[n ,*>ges & ,prov9cial ,9c5tive
,programs dat$ ,septemb] #d1 #aihd4 ,!
-;ts 9 ? bullet9 apply af ,july #aiij4

                ,summ>y
    
  ,? bullet9 describes c]ta9 9come tax
implic,ns >is+ f am.ts 6: ! ,cr[n is
5titl$ 9 rel,n 6! acquisi;n1 develop;t
or [n]%ip (a ,canadian res\rce prop]ty
or 9 rel,n 6! produc;n 9 ,canada f c]ta9
res\rce prop]ties1 ref]r$ 6z 8,cr[n
*>ges40 ,g5],y1 a ,cr[n *>ge is 9clud$ 9
9come1 or is d5i$ z a deduc;n1 :5
det]m9+ 9come4 ,h["e1 c]ta9 ,cr[n *>ges
may qualify z a ,canadian develop;t
exp5se or z a ,canadian oil & gas
prop]ty exp5se4 ,? bullet9 al \tl9es
c]ta9 9come tax 3sequ;es = acquisi;ns f
& 4posi;ns 6! ,cr[n ( produc;n f a
,canadian res\rce prop]ty at o!r ?an
fair m>ket value4
                                      #b
          ,4cus.n & ,9t]pret,n       b#a
    
      ,cr[n *>ge 7p>agraphs #a-b7
    
#a4 ,9 ? bullet91 ! ^w 8,cr[n0 ref]s to3
  7a7 ,h] ,maje/y 9 "r ( ,canada or a
    prov9ce2
  7b7 an ag5t ( ,h] ,maje/y 9 "r (
    ,canada or a prov9ce2 or
  7c7 a corpor,n1 -mis.n or associ,n
    3troll$ by 7a7 or 7b74
  
  ,! expres.n 8,cr[n *>ge0 is us$ 9 ?
  bullet9 6m1n an am.t 6: ! ,cr[n is
  5titl$ & : is 7or may r1sonably 2
  reg>d$ z 2+ a sub/itute =7 a royalty1
  tax1 l1se r5tal or bonus 9 rel,n 6!
  acquisi;n1 develop;t or [n]%ip (a
  ,canadian res\rce prop]ty or 9 rel,n
  6! produc;n 9 ,canada f c]ta9 res\rce
  prop]ties 7see #c 2l74 ,a ,cr[n *>ge
  does n 9clude a tax or any por;n ( tax
  t may r1sonably 2 3sid]$ 6be a
  municipal or s*ool tax or any am.t
  prescrib$ 9 sec;n #abaa (!          #c
             ,,it-#dch;,r#b          c#a
  ,regul,ns4 ,= example1 "u p>agraph 7d7
  ( sec;n #abaa (! ,regul,ns1 an am.t (
  4#b.ej a hect>e = l1se r5tals pd on
  non-produc+ prop]ty is prescrib$4 ,s*
  an am.t
--------------------------------------#b
  is1 "!=e1 n a ,cr[n *>ge & wd 2
  deducti# :5 det]m9+ 9come4
#b4 ,s9ce "! >e v>i\s me?ods 0: ! ,cr[n
  may impose an am.t z a ,cr[n *>ge1 !
  foll[+ provi.ns (! ,act may 2 9volv$3
  7a7 ,if any am.t is pd or paya# 0!
    taxpay] 6! ,cr[n z a ,cr[n *>ge 9
    rel,n 6! acquisi;n1 develop;t or
    [n]%ip (a ,canadian res\rce prop]ty
    or 9 rel,n 6! produc;n 9 ,canada f
    c]ta9 res\rce prop]ties1 p>agraph
    #ah7#a77m7 d5ies a deduc;n :5
    det]m9+ ! taxpay]'s 9come =! am.t (
    ? ,cr[n *>ge 7see #c & #d 2l74
  7b7 ,if any am.t is receiva# 0! ,cr[n
    z a ,cr[n *>ge 9 rel,n 6! acquisi;n1
    develop;t or [n]%ip (a ,canadian
    res\rce prop]ty or 9 rel,n 6!     #d
             ,,it-#dch;,r#b          a#b
    produc;n 9 ,canada f c]ta9 res\rce
    prop]ties1 p>agraph #ab7#a77o7
    requires ! am.t 6be 9clud$ 9 -put+ !
    taxpay]'s 9come 7see #e 2l74
  7c7 ,if an op]ator (a ,canadian
    res\rce prop]ty acquires produc;n f
    t op],n f ! ,cr[n = an am.t t exce$s
    xs fair m>ket value1 subsec;n
    #fi7#g7 applies 6deem ! acquisi;n
    6be at fair m>ket value 7see #aa &
    #ae 2l74
  7d7 ,if an op]ator (a ,canadian
    res\rce prop]ty 4poses ( produc;n f
    t op],n 6! ,cr[n = an am.t less ?an
    xs fair m>ket value1 subsec;ns
    #fi7#f71 #fi7#h7 & #fi7#aj7 apply
    6deem ! 4posi;n 6be at fair m>ket
    value 7see #aa 6#ad 2l74
  7e7 ,if an op]ator (a ,canadian
    res\rce prop]ty 4poses ( produc;n f
    t op],n 6! ,cr[n1 & simultane\sly or
    subsequ5tly acquires produc;n f t
    op],n f ! ,cr[n = an am.t t exce$s
    xs fair m>ket value1 subsec;n     #e
             ,,it-#dch;,r#b          b#b
    #fi7#g7 applies 6deem ! acquisi;n
    6be at fair m>ket value z det]m9$ "u
    subsec;n #fi7#i7 7see #aa & #af 2l71
    & if ! 4posi;n 6! ,cr[n 0 made at
    less ?an fair m>ket value1 subsec;ns
    #fi7#f71 #fi7#h7 & #fi7#aj7 >e n
    3sid]$ 6apply 6t 4posi;n4
  
       ,non-deducti# ,cr[n *>ges
            7p>agraphs #c-d7
    
#c4 ,"u p>agraph #ah7#a77m71 a ,cr[n
  *>ge t is pd or paya# "u an oblig,n
  impos$ 0/atute1 or a 3tractual oblig,n
  sub/itut$ = x1 is n deducti# :5
  det]m9+ 9come if x may r1sonably 2
  reg>d$ z 2+ 9 rel,n to3
  7a7 ! acquisi;n1 develop;t or [n]%ip
    (a 8,canadian res\rce prop]ty0 7z
    def9$ 9 subsec;n #ff7#ae772 or
  7b7 ! produc;n 9 ,canada (3
    7;i7 petroleum1 natural gas or
      relat$ hydroc>bons f a natural
      a3umul,n ( petroleum or         #f
             ,,it-#dch;,r#b          c#b
      natural gas 9 ,canada 7o!r ?an a
      m9]al res\rce7 or f an oil or gas
      well 9 ,canada2
    7;ii7 metal1 m9]als 7o!r ?an iron or
      petroleum or relat$ hydroc>bons7
      or coal f a m9]al res\rce 9
      ,canada 6any /age t is n 2y !
      prime metal /age or xs equival5t2
    7;iii7 iron f a m9]al res\rce 9
      ,canada 6any /age t is n 2y !
      pellet
--------------------------------------#c
      /age or xs equival5t2 or
    7;iv7 petroleum or relat$
      hydroc>bons f t> s&s f a m9]al
      res\rce 9 ,canada 6any /age t is n
      2y ! crude oil /age or xs
      equival5t4
#d4 ,p>agraph #ah7#a77m7 ref]s 6,cr[n
  *>ges pd or paya#4 ,! ^ws 8pd or
  paya#0 9dicate t ei ! ca% me?od or !
  a3rual me?od may 2 us$ 6det]m9e ! am.t
  (a ,cr[n *>ge 9 a tax,n ye> = purposes
  ( ? provi.n provid$ t ! me?od s     #g
             ,,it-#dch;,r#b          a#c
  us$ is 3si/5t )! taxpay]'s e/abli%$
  me?od ( calculat+ 9come = tax
  purposes4 ,h["e1 only taxpay]s 5gag$ 9
  a f>m+ or fi%+ busi;s >e 5titl$ 6use !
  ca% me?od :5 det]m9+ 9come4 ,if 9come
  is calculat$ us+ ! a3rual me?od =a
  tax,n ye> t does n co9cide )! p]iod =
  : a ,cr[n *>ge is calculat$1 ! am.t (!
  ,cr[n *>ge : applies 6! tax,n ye> %d 2
  det]m9$ us+ ! same basis z t us$
  6calculate ! ,cr[n *>ge1 :1 = example1
  may 2 gross sales1 units ( produc;n or
  numb] ( "ds 9 ! relevant p]iod4

       ,cr[n *>ges 9clud$ 9 9come
             7p>agraph #e7
    
#e4 ,"u p>agraph #ab7#a77o71 a ,cr[n
  *>ge 7o!r ?an "o 6: p>agraph
  #ah7#a77m7 applies1 z describ$ 9 #c
  abv7 t 2came receiva# 0! ,cr[n "u an
  oblig,n impos$ 0/atute1 or a 3tractual
  oblig,n sub/itut$ = x1 & t may
  r1sonably 2 reg>d$ z 2+ 9 rel,n     #h
             ,,it-#dch;,r#b          b#c
  6a taxpay]'s activities ref]r$ 6in
  #c7a71 or 6produc;n describ$ 9 #c7b7 9
  : ! taxpay] has an 9t]e/1 is 9clud$ :5
  det]m9+ ! taxpay]'s 9come =! tax,n ye>
  9 : ! am.t 2came receiva#4

         ,cr[n *>ges reimburs$
             7p>agraph #f7
    
#f4 ,if1 "u ! t]ms (a 3tract1 a ,cr[n
  *>ge d5i$ z a deduc;n or 9clud$ 9
  9come "u p>agraph #ah7#a77m7 or
  #ab7#a77o71 respectively1 is reimburs$
  0a taxpay] :o 0 resid5t 9 ,canada or
  c>ry+ on busi;s 9 ,canada at ! "t (!
  reimburse;t1 sec;n #hj.b provides t3
  7a7 ! taxpay] :o makes ! reimburse;t
    is deem$ 6h pd an am.t describ$ 9
    p>agraph #ah7#a77m7 equal 6! am.t (!
    reimburse;t2 &
  7b7 ! taxpay] :o is reimburs$ =! ,cr[n
    *>ge is deem$ n 6h rcvd !
    reimburse;t4
                                      #i
             ,,it-#dch;,r#b          c#c
  ,?us1 :5 a taxpay] 7lessor7 l1ses an
  9t]e/ 9 a ,canadian res\rce prop]ty
  6an op]ator 7lessee71 & "u ! t]ms (!
  agree;t ! lessee reimburses ! lessor
  =! ,cr[n *>ges 9curr$ 0! lessor1 !
  lessee is deem$ 6h pd ! ,cr[n *>ges &
  is d5i$ a deduc;n 0p>agraph #ah7#a77m7
  7provid$ ! lessee is resid5t 9 ,canada
  or c>ry+ on busi;s 9 ,canada at ! "t
  (! reimburse;t74 ,! lessor is deem$ n
  6h rcvd or 6h 2come 5titl$ 6rcv !
  reimburse;t4

      ,cr[n z "pn] or jo9t v5tur]
             7p>agraph #g7
    
#g4 ,6prev5t ! ,cr[n's %>e ( produc;n or
  pr(its1 receiva# 9 xs capac;y z a
  "picipant1 f 2+ 9clud$ 9 ! 9come (!
  o!r "picipants 9 ^? cases :5 !
--------------------------------------#d
  ,cr[n is a "pn] or jo9t v5tur] "u an
  agree;t1 p>agraphs #ab7#a77o7 &
  #ah7#a77m7 apply only 6am.ts :     #aj
             ,,it-#dch;,r#b          a#d
  2come receiva# by1 or pd or paya# to1
  ! ,cr[n "u an oblig,n impos$ 0/atute
  or a 3tractual oblig,n sub/itut$ = x4
  ,= example1 assume t 9 ! case (a
  ,canadian res\rce prop]ty1 ! ,cr[n1 z
  well z 2+ lessor (! prop]ty1 is "o (
  two equal "picipants "u a jo9t v5ture
  agree;t4 ,"u ! agree;t1 ! ,cr[n
  sub/itutes xs "r1 z lessor1 6impose a
  ,cr[n *>ge "u /atute =a "r 6#dj@3p (!
  total produc;n4 ,! rema9+ produc;n is
  6be %>$ equ,y 0! two "picipants4
  ,p>agraph #ab7#a77o7 wd apply 6! o!r
  "picipant = "o half (! #dj@3p (!
  produc;n receiva# 0! ,cr[n 9 place (!
  royalty b x wd n apply 6! #cj@3p (!
  produc;n receiva# 0! ,cr[n 9 xs
  capac;y z a "picipant 9 ! jo9t v5ture4
  ,=! same r1son1 subsec;n #fi7#f7 only
  applies if ! taxpay] makes ! 4posi;n
  6! ,cr[n "u an oblig,n impos$ 0/atute
  or a 3tractual oblig,n sub/itut$ = x4

                                     #aa
      ,canadian develop;t exp5se &   b#d
      ,canadian oil & gas prop]ty
        exp5se 7p>agraphs #h-i7
    
#h4 ,a ,cr[n *>ge t may r1sonably 2
  reg>d$ z 2+ 9 rel,n 6! activities
  ref]r$ 6in #c7a7 abv1 o!r ?an a *>ge
  9curr$ 6pres]ve a taxpay]'s "rs 9 a
  ,canadian res\rce prop]ty1 may qualify
  z a ,canadian develop;t exp5se 7,,cde7
  "u p>agraph 7e7 (! def9i;n (
  8,canadian develop;t exp5se0 9
  subsec;n #ff.b7#e7 or z a ,canadian
  oil & gas prop]ty exp5se 7,,cogpe7 "u
  p>agraph 7a7 (! def9i;n ( 8,canadian
  oil & gas prop]ty exp5se0 9 subsec;n
  #ff.d7#e74 ,if a ,cr[n *>ge does s
  qualify1 x is deducti# :5 det]m9+
  9come1 "u subsec;n #ff.b7#b7 or
  #ff.d7#b71 z ! case may be1 not)/&+
  p>agraph #ah7#a77m74
#i4 ,a ,cr[n *>ge 9curr$ 6pres]ve a
  taxpay]'s "rs 9 a ,canadian res\rce
  prop]ty is n deducti# :5 det]m9+ a
  taxpay]'s 9come 2c ( p>agraph      #ab
             ,,it-#dch;,r#b          c#d
  #ah7#a77m7 7see #c abv71 & no o!r
  provi.n (! ,act p]mits a deduc;n4 ,s*
  ,cr[n *>ges >e specific,y exclud$ f !
  def9i;ns ( ,,cde & ,,cogpe &1 z a
  result1 >e n deducti# "u subsec;ns
  #ff.b7#b7 & #ff.d7#b74

       ,gov]n;t assi/.e 7p>agraph
                  #aj7
    
#aj4 ,any gov]n;t assi/.e t a taxpay]
  has rcvd or is 5titl$ 6rcv ) respect
  6,cr[n *>ges w n reduce ! am.t (a
  ,cr[n *>ge subject 6! provi.ns (
  p>agraphs #ah7#a77m7 or #ab7#a77o74

       ,deem$ fair m>ket value--
         4posi;ns or acquisi;ns
           7p>agraph #aa-af7
    
#aa4 ,9 #ab 6#af 2l3
  7a7 8produc]0 m1ns a taxpay] :o is an
    op]ator ) respect 6a natural
    a3umul,n ( petroleum or          #ac
             ,,it-#dch;,r#b          d#d
    natural gas 9 ,canada1 an oil or gas
    well 9 ,canada or a m9]al res\rce 9
    ,canada2 &
  7b7 8produc;n0 m1ns any petroleum1
    natural gas or relat$ hydroc>bons or
    metal or m9]als produc$ 9 an op],n
    ref]r$ 6in 7a7 abv4
#ab4 ,subsec;n #fi7#f7 provides t :5 a
  produc] 4poses ( produc;n1 "u an
  oblig,n
--------------------------------------#e
  impos$ 0/atute or a 3tractual oblig,n
  sub/itut$ = x1 6! ,cr[n = proce$s (
  4posi;n less ?an xs fair m>ket value
  at ! "t ( 4posi;n1 ! produc] is deem$
  6h rcvd proce$s ( 4posi;n equal 6t
  fair m>ket value det]m9$ )\t reg>d 6!
  relevant /atute or 3tract4
#ac4 ,= purposes ( subsec;n #fi7#f71 !
  fair m>ket value at ! "t ( 4posi;n (a
  unit ( any "picul> quant;y ( produc;n
  is deem$ 0subsec;n #fi7#h7 6be ! am.t
  0:3
                                     #ad
             ,,it-#dch;,r#b          a#e
  7a7 ! av]age proce$s ( 4posi;n = l
    units t 2came receiva# 0! ,cr[n f
    p]sons 7o!r ?an a ,cr[n body7 dur+ !
    mon? 9 : ! 4posi;n o3urr$2
  exce$s ! total (3
  7b7 ! ,cr[n's av]age a7regate ( c]ta9
    exp5ses 9curr$ dur+ t same mon? =
    ea* s* unit2 &
  7c7 ! am.t1 =! unit 4pos$ (1 t may
    r1sonably 2 attribut$ z 2+ an am.t
    pd to1 an am.t t 2came paya# to1 or
    an am.t t 2came receiva# by1 ,h]
    ,maje/y 9 "r ( ,canada =! use &
    b5efit (a b& or b&s z def9$ 9 !
    ,9dian ,act4
  
  ,! exp5ses ref]r$ 6in 7b7 abv >e ^?1
  9clud+ depreci,n1 t may r1sonably 2
  attribut$ 6transmitt+1 transport+1
  m>ket+ or process+ ea* s* unit 6!
  ext5t t s* exp5ses >e r1sona# & nec b
  !y d n 9clude ! co/ ( acquir+ ea* s*
  unit ( produc;n4
                                     #ae
             ,,it-#dch;,r#b          b#e
#ad4 ,= purposes ( subsec;n #fi7#h71
  subsec;n #fi7#aj7 provides t :5 !
  ,cr[n 4poses (a unit ( any "picul>
  quant;y ( produc;n 6ano!r ,cr[n body1
  !y >e deem$ 6be ! same p]son4 ,?us1 9
  ^! circum/.es1 x is ! f9al price rcvd
  0! ,cr[n7s7 t is us$ 6det]m9e ! deem$
  fair m>ket value rcvd 0! produc] 9
  #ac7a7 abv4 ,simil>ly1 x is ! total (!
  exp5ses & am.ts1 ref]r$ 6in #ac7b7 &
  #ac7c7 abv1 (! ,cr[n : has 6be us$ 9 !
  deem$ fair m>ket value calcul,n4
#ae4 ,subsec;n #fi7#g7 provides t :5 a
  produc] acquires produc;n1 9
  circum/.es ": ! taxpay] is requir$ 0a
  law or 3tract 6s acquire ! produc;n1 f
  ! ,cr[n = an am.t 9 excess ( xs fair
  m>ket value1 ! produc] is deem$ 6h
  acquir$ t produc;n at xs fair m>ket
  value det]m9$ )\t reg>d 6! relevant
  /atute or 3tract4
#af4 ,:5 subsec;n #fi7#g7 applies1 &!
  produc;n 0 orig9,y 4pos$ ( 6! ,cr[n 0!
  produc]1 subsec;n #fi7#i7 deems    #af
             ,,it-#dch;,r#b          c#e
  ! fair m>ket value ( s* produc;n1 =
  purposes ( subsec;n #fi7#g71 6be equal
  6! total (3
  7a7 ! am.t1 if any1 pd or paya# 0!
    ,cr[n 6! produc] =! produc;n2 &
  7b7 ! am.t1 if any1 pd or paya# 6,h]
    ,maje/y 9 "r ( ,canada =! use &
    b5efit (a b& or b&s 7z def9$ 9 !
    ,9dian ,act7 (! produc;n4
  
  ,:5 ! specific 3di;ns 9 subsec;n
  #fi7#i7 exi/1 t is1 :5 "! is a 4posi;n
  6&a buy back f ! ,cr[n (a "picul>
  quant;y ( produc;n 0! produc]1
  subsec;ns
--------------------------------------#f
  #fi7#f71 #fi7#h7 & #fi7#aj7 >e 3sid]$
  n 6apply 6! 4posi;n 6! ,cr[n if t
  4posi;n 0 made at less ?an fair m>ket
  value4 ,! example 2l illu/rates !
  =ego+ -;ts4


                                     #ag
             ,,it-#dch;,r#b          a#f
,example
  ,cr[n ;,c & produc] ;,p 5t] 96a jo9t
  v5ture 9 : ea* "py is 6"picipate
  equ,y4 ,9 lieu (a royalty 6! ,cr[n1
  ;,c & ;,p make ! foll[+ 3tractual
  >range;ts3
    --;,c w rcv ! f/ #bj@3p ( produc;n1
      &! rema9+ #hj@3p is 6be %>$ equ,y
      2t ;,c & ;,p4
    --;,p w sell xs #dj@3p "picipatory
      %>e ( produc;n 6;,c at 4#aa a
      unit1 : is 4#a a unit less ?an
      fair m>ket value4
    --;,p w pur*ase #ajj@3p (! produc;n
      f ;,c at 4#ac a unit1 : is 4#a a
      unit m ?an fair m>ket value4
  ,fair m>ket value is 4#ab a unit1 &
  produc;n is #ajj units4

,calcul,n ( ;,p's ,cr[n *>ges
  ,! ,cr[n *>ges obta9$ f ;,p >e 4#bfj1
  calculat$ z foll[s3
  7a7 ;,p's "o-half 3tribu;n
    6;,c's #bj@3p non-"picipat+      #ah
             ,,it-#dch;,r#b          b#f
    %>e at fair m>ket value3
    ..#aj units at 4#ab a .unit
      7p>agraph #ab7#a77o772 """"" 4#abj
  7b7 ord9>ily subsec;n #fi7#f7
    wd apply 6? transac;n b x is
    n appli$ :5 subsec;n #fi7#i7
    is appli$ 6! same produc;n
    7see 7c7 & ,note #a 2l72
  7c7 ! #ajj units pur*as$ 0;,p f
    ;,c >e divid$ 96two gr\ps3
    7;i7 ;,p's #dj@3p "picipatory
      %>e f/ sold 6;,c at less
      ?an fair m>ket value 7,note
      #a73
      #dj units at 4#b a unit
        7subsec;ns #fi7#g7 &
        7#i772 """""""""""""""""""" 4#hj
    7;ii7 ;,c's #dj@3p
      "picipatory %>e plus #bj@3p
      non-"picipatory %>e1
      pur*as$ 0;,p 9 excess (
      fair m>ket value 7,note
      #b73
                                     #ai
             ,,it-#dch;,r#b          c#f
      #fj units at 4#a a unit
        7subsec;n #fi7#g772 """"""" 4#fj
  ,total ,cr[n *>ges """"""""""""" 4#bfj
  
,note #a3
  ,! 4#b p] unit *>ge = ;,p's "picipat+
  %>e t 0 sold 6& reacquir$ f ;,c1
  repres5ts ! excess ( ;,p's reacquisi;n
  price ( 4#ac a unit ov] ! fair m>ket
  value1 :1 "u subsec;n #fi7#i71 is
  deem$ 6be ! price pd 0;,c 6;,p =! same
  produc;n1 4#aa a unit4
,note #b3
  ,! 4#a p] unit *>ge = ;,c's
  "picipatory %>e repres5ts ! excess (
  ;,p's acquisi;n price ( 4#ac a unit
  ov] ! fair m>ket value ( 4#ab a unit4
--------------------------------------#g
,calcul,n ( ;,p's gross pr(it
  ;,p's gross pr(it 7af sell+ all !
  produc;n at 4#ab a unit7 w 2 4#cdj1
  calculat$ z foll[s3

                                     #bj
             ,,it-#dch;,r#b          a#g
,sales3
  ,4posi;n 6;,c ..#dj units at
    .4#aa """""""""""""""""""""""" 4#ddj
  ,4posi;n on ! m>ket ..#ajj
    units at .4#ab """"""""""""" 4#a1bjj
,total sales """"""""""""""""""" 4#a1fdj
,co/ ( sales3
  ,pur*ase f ;,c ..#ajj units at
    .4#ac """""""""""""""""""""" 4#a1cjj
.,gross .pr(it """"""""""""""""""" 4#cdj

  ,= tax purposes1 ;,p's gross 9come wd
  2 4#fjj 7gross pr(it ( 4#cdj plus !
  ,cr[n *>ges ( 4#bfj74

       ,cr[n *>ges (a non-resid5t
             7p>agraph #ag7
    
#ag4 ,"u p>agraph #bab7#a77d7 & subsec;n
  #bad7#a71 x is ! gross am.t (a royalty
  or simil> am.t pd or cr$it$ 0a p]son
  resid5t 9 ,canada 7or deem$ 6be
  resid5t 9 ,canada 0subsec;n
  #bab7#ac.b77 6a non-resid5t1 2f    #ba
             ,,it-#dch;,r#b          b#g
  any deduc;n =! ,cr[n *>ges : >e
  requir$ 6be borne 0! non-resid5t1 t is
  subject 6tax "u ,"p ,,xiii (! ,act4
  ,h["e1 if ! non-resid5t royalty [n] is
  n requir$ 6be> a %>e ( ,cr[n *>ges1 z1
  = example1 :5 a royalty is bas$ on net
  pr(its 7af deduct+ ,cr[n *>ges71 !
  am.t subject 6! provi.ns ( ,"p ,,xiii
  is ! am.t (! royalty s calculat$ & pd
  or cr$it$ 6! non-resid5t [n]4 ,on !
  o!r h&1 tax "u ,"p ,,xiii w n 2 exigi#
  on am.ts : >e requir$ 6be 9clud$1 "u
  ,"p ;,i1 :5 det]m9+ ! 9come f a busi;s
  c>ri$ on 0a non-resid5t p]son 9
  ,canada4 ,9 ? reg>d1 ref];e %d 2 made
  6sec;n #hje (! ,regul,ns4

  ,if y h any -;ts ab ? bullet91 pl1se
s5d !m to3




                                     #bb
             ,,it-#dch;,r#b          c#g
  ,director1 ,te*nical ,public,ns
    ,divi.n
  ,policy & ,legisl,n ,bran*
  ,rev5ue ,canada
  #hge ,h]on ,road
  ,ottawa ,,on ,k#a;,a #j;,l#h
  
















                                     #bc
         ,explan,n ( ,*anges =        #h
          ,9t]pret,n ,bullet9
             ,,it-#dch;,r#b
    
         ,cr[n ,*>ges--,res\rce
          ,prop]ties 9 ,canada
    
               ,9troduc;n
    
  ,! purpose (! ,explan,n ( ,*anges is
6give ! r1sons =! revi.ns 6an 9t]pret,n
bullet94 ,x \tl9es revi.ns we h made z a
result ( *anges 6! law1 z well z *anges
reflect+ new or revis$ de"p;tal
9t]pret,ns4

                ,ov]view
    
  ,? bullet9 expla9s ! t]m 8,cr[n *>ge0
& \tl9es c]ta9 9come tax implic,ns >is+
"!from4 ,we revis$ ! bullet9 6reflect
am5d;ts 6! ,9come ,tax ,act 0,s4,c4
#aihe1 c4 #de 7=m]ly ,bill ;,c-#gb71
,s4,c4 #aihf1 c4 #f 7=m]ly ,bill
                                     #bd
             ,,it-#dch;,r#b          a#h
;,c-#hd7 & ,s4,c4 #aiia1 c4 #di 7=m]ly
,bill ;,c-#ah74
  ,! 3t5ts ( ? bullet9 >e n a6ect$ 0any
draft legisl,n rel1s$ prior 6,april #ba1
#aiie4

       ,legislative & o!r *anges
    
  ,6be m 3cise1 we h *ang$ ! title (!
bullet9 f ,9come ,f ,oil or ,gas ,wells
or ,m9]al ,res\rces--,cr[n ,*>ges &
,prov9cial ,9c5tive ,programs 6,cr[n
,*>ges--,res\rce ,prop]ties 9 ,canada4
  ,we h revis$ p>agraph #c 6reflect !
,bill ;,c-#gb & ,bill ;,c-#ah am5d;ts
6p>agraphs #ab7#a77o7 & #ah7#a77m74 ,^!
*anges s]ve 6fur!r di6]5tiate ^?
activities t >e res\rce activities 7!
,cr[n *>ges ( : >e n deducti#7 f
manufactur+ & process+ activities 7!
,cr[n *>ges ( :1 if any1 >e deducti#74
,! activities id5tifi$ z res\rce
activities >e ! process+ ( iron ore 6!
pellet /age 7r ?an 6! prime metal    #be
             ,,it-#dch;,r#b          b#h
/age7 &! process+ ( t> s&s 6! crude oil
/age4 ,9 a4i;n1 coal royalties >e
specific,y id5tifi$ z 2+ )9 ! scope (
p>agraphs #ab7#a77o7 & #ah7#a77m74
  ,we h revis$ p>agraph #aj 7=m]
p>agraph #ab7 6hi<li<t t gov]n;t assi/.e
9 respect ( ,cr[n *>ges does n reduce !
am.t (! ,cr[n *>ge subject 6! provi.ns (
p>agraphs #ab7#a77o7 & #ah7#a77m74
  ,p>agraph #aa 7=m] p>agraph #ac7 n[
reflects ! ,bill ;,c-#hd am5d;t 6!
pream# 6subsec;ns #fi7#f7 & #fi7#g74 ,?
*ange 0 3sequ5tial 6an expan.n (!
def9i;n 8,canadian explor,n exp5se0
69clude op]ators ( 8a natural a3umul,n (
petroleum or natural gas 9 ,canada40
  ,p>agraphs #ac & #af 7=m] p>agraph #ae
& "p ( =m] p>agraph #ag7 reflect ! ,bill
;,c-#gb am5d;ts 6subsec;ns #fi7#h7 &
#fi7#i74 ,^! *anges a6ect ! deem$ fair
m>ket value calcul,n = 4posi;ns 6or
acquisi;ns f ! ,cr[n at o!r ?an fair
m>ket value4 ,! deem$ fair
                                     #bf
             ,,it-#dch;,r#b           #i
m>ket value rules 7 am5d$ 6exclude am.ts
pd or paya# =! use & b5efit ( an ,9dian
b&4 ,"u ,sec;n #abaa (! ,regul,ns1 ^!
am.ts >e specific,y exclud$ f 2+ ,cr[n
*>ges = purposes ( p>agraphs #ah7#a77m7
& #ab7#a77o74
  ,we h delet$ =m] #f1 : d1lt ) #aigd
transi;nal law4
  ,we h made a numb] ( o!r *anges
6improve ! ov]all cl>;y & r1dabil;y (!
bullet94












                                     #bg