Income Tax Act — I-3.3 66
ion of an amount deducted under subsection 66.7(2) in computing the taxpayer’s income for the year that 1 can reasonably be considered to be in respect of the foreign resource property, and 2 cannot reasonably be considered to have reduced the amount otherwise determined under clause (A) or (B) in respect of the taxpayer for the year. Country-by-country FEDE allocations (4.1) For greater certainty, the portion of an amount deducted under subsection (4) 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 (4.2) For the purpose of subsection (4.1), 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 (4.1) for the preceding taxation year. FEDE deductions where change of individual’s residence (4.3) 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 subsection (4), subsection (13.1) does not apply to the individual for the year. Dealers (5) Subsections (3) and (4) and sections 59, 64, 66.1, 66.2, 66.21, 66.4 and 66.7 do not apply in computing the income for a taxation year of a taxpayer (other than a principal-business corporation) whose business includes trading or dealing in rights, licences or privileges to explore for, drill for or take minerals, petroleum, natural gas or other related hydrocarbons. (10) to (10.3) [Repealed, 1997, c. 25, s. 13(1)] Idem (10.4) Where a taxpayer has, after April 19, 1983, made a payment or loan described in paragraph (a) of the definition agreed portion in subsection 66(15) to a joint exploration corporation in respect of which the corporation has at any time renounced in favour of the taxpayer any Canadian exploration expenses, Canadian development expenses or Canadian oil and gas property expenses (in this subsection referred to as “resource expenses”) under subsection 66(10.1), 66(10.2) or 66(10.3), the following rules apply: (a) where the taxpayer receives as consideration for the payment or loan property that is capital property to the taxpayer, (i) there shall be deducted in computing the adjusted cost base to the taxpayer of the property at any time the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at or before that time, (ii) there shall be deducted in computing the adjusted cost base to the taxpayer at any time of any property for which the property, or any property substituted therefor, was exchanged the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at or before that time (except to the extent such amount has been deducted under subparagraph 66(10.4)(a)(i)), and (iii) the amount of any resource expenses renounced by the corporation in favour of the taxpayer in respect of the loan or payment at any time, except to the extent that the renunciation of those expenses results in a deduction under subparagraph 66(10.4)(a)(i) or 66(10.4)(a)(ii), shall, for the purposes of this Act, be deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of property at that time; (b) where the taxpayer receive