Income Tax Act — I-3.3 66.4
Recovery of costs 66.4 (1) For the purposes of the description of B in the definition cumulative Canadian oil and gas property expense in subsection 66.4(5) and the description of L in the definition cumulative Canadian development expense in subsection 66.2(5) and for the purpose of subparagraph 64(1.2)(a)(ii) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, as it applies to dispositions occurring before November 13, 1981, the amount determined under this subsection in respect of a taxpayer for a taxation year is the amount, if any, by which (a) the total of all amounts referred to in the descriptions of E to J in the definition cumulative Canadian oil and gas property expense in subsection 66.4(5) that are deducted in computing the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year exceeds the total of (b) all amounts referred to in the descriptions of A to D.1 in the definition cumulative Canadian oil and gas property expense in subsection 66.4(5) that are included in computing the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year, and (c) the total determined under subparagraph 66.7(12.1)(c)(i) in respect of the taxpayer for the year. Deduction for cumulative Canadian oil and gas property expense (2) A taxpayer may deduct, in computing the taxpayer’s income for a taxation year, such amount as the taxpayer may claim not exceeding the total of (a) the lesser of (i) the total of (A) the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year, and (B) the amount, if any, by which (I) the total determined under subparagraph 66.7(12.1)(c)(i) in respect of the taxpayer for the year exceeds (II) the amount that would, but for paragraph 66.4(1)(c), be determined under subsection 66.4(1) in respect of the taxpayer for the year, and (ii) the amount, if any, by which the total of all amounts each of which is (A) an amount included in the taxpayer’s income for the year by virtue of a disposition in the year of inventory described in section 66.3 that was a share or any interest in or right to — or, for civil law, any right in or to — a share acquired by the taxpayer under circumstances described in paragraph (c) of the definition Canadian oil and gas property expense in subsection (5), or (B) an amount included by virtue of paragraph 12(1)(e) in computing the taxpayer’s income for the year to the extent that it relates to inventory described in clause (A) exceeds (C) the total of all amounts deducted as a reserve by virtue of paragraph 20(1)(n) in computing the taxpayer’s income for the year to the extent that the reserve relates to inventory described in clause (A); (b) 10% of the amount, if any, by which the amount determined under subparagraph 66.4(2)(a)(i) exceeds the amount determined under subparagraph 66.4(2)(a)(ii); (c) the amount determined by the formula A(B − C) where A is (i) for taxation years that end before 2024, 5%, (ii) for taxation years that begin before 2024 and end after 2023, the amount determined by the formula 0.05(I/J) + 0.025(K/J) where I is the total of all accelerated Canadian oil and gas property expenses incurred by the taxpayer before 2024 and in the taxation year, J is the total of all accelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year, and K is the total of all accelerated Canadian oil and gas property expenses incurred by the taxpayer after 2023 and in the taxation year, and (iii) for taxation years that begin after 2023, 2.5%, B is the total of all accelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year, and C is the amount determined by the formula (D − E) − (F − G − H) where D is the total of the amounts determined for E to J in the definition cumulative Canadian oil and gas property expense in subsection (5) at the end of the taxation year, E is the total of the amounts determined for E to J in