Income Tax Regulations — 1205
exploration expense incurred after 1981 in respect of a qualified tertiary oil recovery project of the taxpayer that (I) would be referred to in subparagraph 66.1(6)(a)(ii) or (ii.1) of the Act if subparagraph 66.1(6)(a)(ii) were read without reference to clause (B) thereof, or (II) would be referred to in subparagraph 66.1(6)(a)(iv) or (v) of the Act if the Act were read without reference to clause 66.1(6)(a)(ii)(B) and subparagraphs 66.1(6)(a)(i), (i.1), (ii.2), (iii) and (iii.1), other than the portion of such expense referred to in subclause (I) or (II) that is (III) described in any of clauses (ii)(A) to (D) and (F), (IV) included in the amount determined under subparagraph (v) or clause (vi)(A), (V) described in subclause (B)(III), or (VI) an eligible expense within the meaning of the Canadian Exploration Incentive Program Act in respect of which the taxpayer, a partnership of which the taxpayer was a member or a principal-business corporation of which the taxpayer was a shareholder corporation, has received, is entitled to receive or may reasonably be expected to receive at any time an incentive under that Act, (C) the stated percentage of the capital cost to it of property that is tertiary recovery equipment, and (D) the stated percentage of the capital cost to it of property that is, or but for Class 41 of Schedule II would be, included in Class 10 in Schedule II by virtue of paragraph (u) of the description of that Class, other than the capital cost to it of property that had, before the property was acquired by it, been used for any purpose whatever by any person with whom it was not dealing at arm’s length, (b) all amounts, in respect of expenditures (other than expenditures referred to in paragraph (a) or expenditures to acquire property under circumstances that entitled the taxpayer to a deduction under section 1202 or would so entitle the taxpayer if the amounts referred to in paragraphs 1202(2)(a) and (b) were sufficient for the purpose) incurred by the taxpayer after May 8, 1972 and before the particular time, each of which was the stated percentage of the capital cost to the taxpayer of property that is or, but for Class 41, would be included in Class 10 in Schedule II because of paragraph (k) of the description of that Class and that was acquired for the purpose of processing in Canada (i) ore (other than iron ore or tar sands ore), after its extraction from a mineral resource, to any stage that is not beyond the prime metal stage or its equivalent, (ii) iron ore, after its extraction from a mineral resource, to any stage that is not beyond the pellet stage or its equivalent, or (iii) tar sands ore, after its extraction from a mineral resource, to any stage that is not beyond the crude oil stage or its equivalent, other than the capital cost to him of property that had, before the property was acquired by the taxpayer, been used for any purpose whatever by any person with whom the taxpayer was not dealing at arm’s length, (c) all amounts, in respect of expenditures (other than expenditures referred to in paragraph (a) or (b) or expenditures to acquire property under circumstances that entitled the taxpayer to a deduction under section 1202 or would so entitle the taxpayer if the amounts referred to in paragraphs 1202(2)(a) and (b) were sufficient for the purpose) incurred by the taxpayer before the particular time, each of which was the stated percentage of the capital cost to the taxpayer of property (other than property that had, before it was acquired by the taxpayer, been used for any purpose whatever by any person with whom the taxpayer was not dealing at arm’s length) that is included in Class 28 or paragraph (a) of Class 41, in Schedule II, other than property so included (i) by virtue of the first reference in Class 28 to paragraph (l) of Class 10 in Schedule II, where the property was acquired by the taxpayer before November 17, 1978, (ii) by virtue of the reference in Class 28 to paragraph (m) of C