Income Tax Regulations — 4608
n year. (6) For the purposes of this section, the base amount of a taxpayer at the end of a particular taxation year in respect of a well is the amount, if any, by which the taxpayer’s threshold amount in respect of the well exceeds the aggregate of (a) all amounts that would have been the taxpayer’s specified expenses for any taxation year in respect of the well if (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and (ii) subsection (5) were read without reference to paragraph (d) thereof; (b) all amounts referred to in paragraph (5)(d) for the particular taxation year or a preceding taxation year in respect of the well that would have been included in determining the taxpayer’s specified expenses for the particular taxation year or the preceding taxation year but for that paragraph; and (c) all amounts that are the taxpayer’s specified expenses for any preceding taxation year in respect of the well. (7) For the purposes of this section, the threshold amount of a taxpayer in respect of a well is (a) where no agreement has been filed with the Minister under subsection (8) in respect of the well, $5,000,000; and (b) where an agreement has been filed with the Minister under subsection (8) in respect of the well, the amount, if any, allocated to the taxpayer under the agreement. (8) For the purposes of this section, where the aggregate of all expenses in respect of a well, each of which (a) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if subsection (5) were read without reference to paragraph (d) thereof, or (b) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and (ii) subsection (5) were read without reference to paragraph (d) thereof, exceeds $5,000,000, all taxpayers who have incurred those expenses or in whose favour or to whom any of those expenses have been renounced under subsection 66(10.1) or (12.6) of the Act may file with the Minister an agreement in writing in the prescribed form in respect of the well allocating amounts to some or all of those taxpayers if (c) the amount allocated to each taxpayer does not exceed the total of such expenses that were incurred by the taxpayer in respect of the well, and that are not to be renounced by the taxpayer under subsection 66(10.1) or (12.6) of the Act in favour of or to any other person, and (d) the aggregate of all amounts so allocated is not less than $5,000,000. (9) For the purposes of this section, where (a) the drilling of a well (in this subsection referred to as the “abandoned well”) is abandoned not because of the results obtained but because of geological or mechanical difficulties and the drilling of a new well (in this subsection referred to as the “new well”) is commenced, and (b) having regard to all the circumstances, including the lapse of time between the abandonment of the abandoned well and the commencement of the new well and the proximity of the sites of the wells, it is reasonable to regard the new well as a replacement for the abandoned well, the abandoned well and the new well shall be deemed to be one well. (10) For the purpose of this section, where an expense of a joint exploration corporation is deemed by subsection 66(10.1) or (10.2) of the Act to be an expense of a shareholder corporation of the joint exploration corporation, the shareholder corporation shall be deemed to have incurred the expense at the time it was incurred by the joint exploration corporation. (11) For the purpose of this section, where an expense of a principal-business corporation is deemed by subsection 66(12.61) or (12.63) of the Act to be an expense of a shareholder of the c