Income Tax Act — I-3.3 66
Exploration and development expenses of principal-business corporations 66 (1) A principal-business corporation may deduct, in computing its income for a taxation year, the lesser of (a) the total of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year, to the extent that they were not deductible in computing income for a previous taxation year, and (b) of that total, an amount equal to its income for the taxation year if no deduction were allowed under this subsection, section 65 or subsection 66.1(2), minus the deductions allowed for the year by sections 112 and 113. Expenses of special product corporations (2) A corporation (other than a principal-business corporation the principal business of which is described in paragraph (a) or (b) of the definition principal-business corporation in subsection 66(15)), whose principal business is the production or marketing of sodium chloride or potash or whose business includes manufacturing products the manufacturing of which involves processing sodium chloride or potash, may deduct, in computing its income for a taxation year, the drilling and exploration expenses incurred by it in the year and before May 7, 1974 on or in respect of exploring or drilling for halite or sylvite. Expenses of other taxpayers (3) A taxpayer other than a principal-business corporation may deduct, in computing the taxpayer’s income for a taxation year, the total of the taxpayer’s Canadian exploration and development expenses to the extent that they were not deducted in computing the taxpayer’s income for a preceding taxation year. Foreign exploration and development expenses (4) A taxpayer who is resident throughout a taxation year in Canada may deduct, in computing the taxpayer’s income for that taxation year, the lesser of (a) the amount, if any, by which (i) the total of the foreign exploration and development expenses incurred by the taxpayer (A) before the end of the year, (B) at a time at which the taxpayer was resident in Canada, and (C) where the taxpayer became resident in Canada before the end of the year, after the last time (before the end of the year) that the taxpayer became resident in Canada, exceeds the total of (ii) such of the expenses described in subparagraph 66(4)(a)(i) as were deductible in computing the taxpayer’s income for a preceding taxation year, and (iii) all amounts by which the amount described in this paragraph in respect of the taxpayer is required because of subsection 80(8) to be reduced at or before the end of the year, and (b) of that total, the greater of (i) the amount, if any, claimed by the taxpayer not exceeding 10% of the amount determined under paragraph (a) in respect of the taxpayer for the year, and (ii) the total of (A) the part of the taxpayer’s income for the year, determined without reference to this subsection and subsection 66.21(4), that can reasonably be regarded as attributable to (I) the production of petroleum or natural gas from natural accumulations outside Canada or from oil or gas wells outside Canada, or (II) the production of minerals from mines outside Canada, (B) the taxpayer’s income for the year from royalties in respect of a natural accumulation of petroleum or natural gas outside Canada, an oil or gas well outside Canada or a mine outside Canada, determined without reference to this subsection and subsection 66.21(4), and (C) all amounts each of which is an amount, in respect of a foreign resource property 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 the 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 1 can reasonably be considered to be in respect of the foreign resource property, and 2 cannot r