Income Tax Act — I-3.3 66.7
exceeds (ii) the total of all amounts each of which is an amount by which the amount described in this paragraph is required because of subsection 80(8) to be reduced at or before the end of the year, and (b) the amount, if any, by which the total of (i) the part of the successor’s income for the year that can reasonably be regarded as attributable to (A) the amount included under subsection 59(1) in computing its income for the year that can reasonably be regarded as attributable to the disposition by it of any interest in or right to — or, for civil law, any right in or to — the particular property, or (B) production from the particular property, computed as if no deduction were allowed under sections 65 to 66.5 and this section, and (ii) the lesser of (A) the total of all amounts each of which is the amount designated by the successor for the year in respect of a Canadian resource property owned by the original owner immediately before being acquired with the particular property by the successor or a predecessor owner of the particular property, not exceeding the amount included in the successor’s income for the year, computed as if no deduction were allowed under section 29 of the Income Tax Application Rules , this section or any of sections 65 to 66.5, that can reasonably be regarded as being attributable to the production after 1988 from the Canadian resource property, and (B) the amount, if any, by which 10% of the amount described in paragraph 66.7(2)(a) for the year in respect of the original owner exceeds the total of all amounts each of which would, but for this subparagraph, clause 66.7(2)(b)(iii)(B) and subparagraph 66.7(10)(h)(vi), be determined under this paragraph for the year in respect of the particular property or other foreign resource property owned by the original owner immediately before being acquired with the particular property by the successor or a predecessor owner of the particular property exceeds the total of (iii) all other amounts deducted under this subsection for the year that can reasonably be regarded as attributable to (A) the part of its income for the year described in subparagraph 66.7(2)(b)(i) in respect of the particular property, or (B) a part of its income for the year described in clause 66.7(2)(b)(ii)(A) in respect of which an amount is designated by the successor under clause 66.7(2)(b)(ii)(A), and (iv) all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(2)(b)(i), and income in respect of which an amount is designated under clause 66.7(2)(b)(ii)(A) shall, for the purposes of clause 29(25)(d)(i)(B) of the Income Tax Application Rules , clauses 66.7(1)(b)(i)(C), 66.7(3)(b)(i)(C), 66.7(4)(b)(i)(B) and 66.7(5)(b)(i)(B) and subparagraph 66.7(10)(g)(iii), be deemed not to be attributable to production from a Canadian resource property. Country-by-country successor FEDE allocations (2.1) For greater certainty, the portion of an amount deducted under subsection (2) 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 (2.2) For the purpose of subsection (2.1), 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 (2.1) for the preceding taxation year. Successor of foreign resource expenses (2.3) Subject to subsections (6) and (8), where a