Income Tax Application Rules — I-3.31 29
or petroleum or natural gas, or exploring or drilling for petroleum or natural gas, or (b) mining or exploring for minerals, has, at any time after 1954, acquired a particular Canadian resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise) from another person whose principal business was a business described in paragraph (a) or (b), 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 (c) the total of (i) the drilling and exploration expenses, including all general geological and geophysical expenses, incurred before 1972 by the original owner on or in respect of exploring or drilling for petroleum or natural gas in Canada, and (ii) the prospecting, exploration and development expenses incurred before 1972 by the original owner in searching for minerals in Canada, to the extent that those expenses (iii) were not otherwise deducted in computing the income of the successor for the year, were not deducted in computing the income of the successor for any preceding taxation year and were not deductible by the original owner or deducted by any predecessor owner of the particular property in computing income for any taxation year, and (iv) would, but for the provisions of any of this subsection and paragraphs (1)(b), (2)(b), (3)(a), (4)(h) and 24(d), have been deductible in computing the income of the original owner or any predecessor owner of the particular property for the taxation year preceding the taxation year in which the particular property was acquired by the successor, and (d) the amount, if any, by which (i) the part of its income for the year that can reasonably be regarded as being attributable to (A) the amount included in computing its income for the year under paragraph 59(3.2)(c) of the amended Act that can reasonably be regarded as being attributable to the disposition by it in the year or a preceding taxation year of any Canadian resource properties owned by the original owner and each predecessor owner of the particular property before the acquisition of the particular property by the successor to the extent that the proceeds of the disposition have not been included in determining an amount under this clause or clause 66.7(1)(b)(i)(A) or (3)(b)(i)(A) or paragraph 66.7(10)(g) of the amended Act for a preceding taxation year, or (B) production from the particular property, computed as if no deduction were allowed under this section or subdivision e of Division B of Part I of the amended Act, exceeds (ii) the total of all other amounts deducted under this subsection and subdivision e of Division B of Part I of the amended Act for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph (i) in respect of the particular property. Definitions (25.1) For the purposes of subsection (25), the terms Canadian resource property , original owner , predecessor owner and production have the meanings assigned by subsection 66(15) of the amended Act. Processing or fabricating corporation (26) A reference in subsection (3), (21), (24) or (25) to a corporation whose principal business is mining or exploring for minerals shall, for the purposes of this section, be deemed to include a reference to a corporation whose principal business is (a) processing mineral ores for the purpose of recovering metals therefrom, (b) a combination of (i) processing mineral ores for the purpose of recovering metals therefrom, and (ii) processing metals recovered from the ores so processed, or (c) fabricating metals, but in applying the provisions of this section to any such corporation the references, respectively, in subsections (3), (21), (24) and (25) to the years 1952, 1953 and 1954 shall be read as a reference in each case to the year 1956. Meaning