Income Tax Application Rules — I-3.31 29
r not) produced in association with the petroleum, natural gas or other related hydrocarbons (except coal) or found in any water contained in an oil or gas reservoir, or (b) to enter on, use and occupy as much of the land as is necessary for the purpose of exploiting the right, licence or privilege, an amount paid in respect of the acquisition thereof that was paid (c) before 1972, shall, for the purposes of subsections (4), (7), (10), (11) and (12), be deemed to be a drilling or exploration expense on or in respect of exploring or drilling for petroleum or natural gas in Canada incurred at the time of its payment, (d) after 1971 and before May, 7, 1974, shall, for the purposes of the amended Act, be deemed to be Canadian exploration and development expenses (within the meaning assigned by subsection 66(15) of the amended Act) incurred at the time of its payment, and (e) after May 6, 1974, shall, for the purposes of the amended Act, be deemed to be a Canadian development expense (within the meaning assigned by subsection 66.2(5) of the amended Act) incurred at the time of its payment. Idem (15) In applying subsection (14) for the purposes of subsection (7), the expression “after April 10, 1962 and before 1972” in subsection (14) shall be read as “after April 10, 1962 and before April 27, 1965”. Receipts for exploration or drilling rights included in income (16) Where a right, licence or privilege to explore for, drill for or take in Canada petroleum, natural gas or other related hydrocarbons (except coal) was disposed of after April 10, 1962 and before October 23, 1968 (a) by a corporation described in subsection (4), (b) by a corporation, other than a corporation described in subsection (4), that was at the time of acquisition of the right, licence or privilege a corporation described in subsection (4), or (c) by an association, partnership or syndicate described in subsection (9), any amount received by the corporation, association, partnership or syndicated as consideration for the disposition thereof shall be included in computing its income for its fiscal period in which the amount was received, unless the corporation, association, partnership or syndicate (d) acquired the right, licence or privilege by inheritance or bequest, or (e) acquired the right, licence or privilege before April 11, 1962 and disposed of it before November 9, 1962. Idem (17) Where a right, licence or privilege to explore for, drill for or take in Canada petroleum, natural gas or other related hydrocarbons (except coal) that was acquired after April 10, 1962 and before 1972 by an individual or a corporation other than a corporation described in subsection (4), was subsequently disposed of before October 23, 1968, any amount received by the taxpayer as consideration for the disposition thereof shall be included in computing the taxpayer’s income for the taxation year in which the amount was received, unless the right, licence or privilege was acquired by the taxpayer by inheritance or bequest. Idem (18) Subsections (16) and (17) do not apply to any disposition by an association, partnership or syndicate described in subsection (9) or a corporation or an individual of any right, licence or privilege described in subsection (14) or (16) unless the right, licence or privilege was acquired by the association, partnership, syndicate or corporation or individual, as the case may be, under an agreement, contract or arrangement described in subsection (14). Idem (19) For the purposes of subsections (16) and (17), (a) where an association, partnership or syndicate described in subsection (9) or a corporation or an individual has disposed of any interest in land that includes a right, licence or privilege described in subsection (14) that was acquired under an agreement, contract or arrangement described in that subsection, the proceeds of disposition of the interest shall to be deemed to be proceeds of disposition of the right, licence or privilege; and (b) w