Income Tax Regulations — 1206
d by the joint exploration corporation; and (b) for the purposes of sections 1204 and 1210 and paragraphs 1217(2)(e) and 1218(2)(e), be deemed to have been such an expense incurred by the taxpayer at the time it was deemed to have been incurred by the taxpayer for the purposes of subsection 66(10), (10.1) or (10.2) of the Act or subsection 29(7) of the Income Tax Application Rules , as the case may be. (4.1) An expense that is a Canadian exploration and development overhead expense of the joint exploration corporation referred to in subsection (4), or would be such an expense if the references to “connected with the taxpayer” in paragraph (d) of the definition Canadian exploration and development overhead expense in subsection (1) were read as “connected with the shareholder corporation in favour of whom the expense was renounced for the purposes of subsection 66(10.1) or (10.2) of the Act”, that may reasonably be considered to be included in a Canadian exploration expense or Canadian development expense that is deemed by subsection (4) to be a Canadian exploration expense or Canadian development expense of the shareholder corporation, shall be deemed to be a Canadian exploration and development overhead expense of the shareholder corporation incurred by it at the time the expense was deemed by subsection (4) to have been incurred by it and shall be deemed at and after that time not to be a Canadian exploration and development overhead expense incurred by the joint exploration corporation. (4.2) For the purposes of paragraphs 66(12.6)(b), (12.601)(d) and (12.62)(b) of the Act, a prescribed Canadian exploration and development overhead expense of a corporation is (a) a Canadian exploration and development overhead expense of the corporation; (b) an expense that would be a Canadian exploration and development overhead expense of the corporation if the references to “connected with the taxpayer” in paragraph (d) of the definition Canadian exploration and development overhead expense in subsection (1) were read as “connected with the person to whom the expense is renounced under subsection 66(12.6), (12.601) or (12.62) of the Act”; and (c) an expense that would be a Canadian exploration and development overhead expense of the corporation if the references to “person who was connected with the taxpayer” in paragraph (d) of the definition Canadian exploration and development overhead expense in subsection (1) were read as “person to whom the expense is renounced under subsection 66(12.6), (12.601) or (12.62) of the Act”. (4.3) For the purposes of subsections (4.2) and (5), a partnership shall be deemed to be a person and its taxation year shall be deemed to be its fiscal period. (5) For the purposes of subsection (6) and the definition Canadian exploration and development overhead expense in subsection (1), (a) a person and a particular corporation are connected with each other if (i) the person and the particular corporation are not dealing at arm’s length, (ii) the person has an equity percentage in the particular corporation that is not less than 10 per cent, or (iii) the person is a corporation in which another person has an equity percentage that is not less than 10 per cent and the other person has an equity percentage in the particular corporation that is not less than 10 per cent; (a.1) a person and another person that is not a corporation are connected with each other if they are not dealing at arm’s length; and (b) “costs incurred by a person” shall not include (i) an outlay or expense described in any of paragraphs (a) to (c) of that definition made or incurred by the person if the references in those paragraphs to “taxpayer” were read as references to “person”, (ii) an outlay or expense made or incurred by the person to the extent that it is not reasonably attributable to the use of a property by, the performance of a service for, or any materials, parts, or supplies acquired by, the taxpayer referred to in that definiti