18 (1) A principal-business corporation may deduct, in computing its income for a taxation year, the lesser of, (a) the aggregate of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year, to the extent that they were not deductible in computing income for a previous taxation year; and (b) of that aggregate, an amount equal to its income for the taxation year if no deduction were allowed under this subsection or section 17, minus the deductions allowed for the taxation year by sections 112 and 113 of the Income Tax Act (Canada) as made applicable by section 34 of this Act.  R.S.O. 1990, c. C.40, s. 18 (1); 2004, c. 16, s. 2 (2). Expenses of other corporations (2) A corporation other than a principal-business corporation may deduct, in computing its income for a taxation year, the lesser of, (a) the aggregate of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year to the extent they were not deductible in computing its income for a previous taxation year; and (b) of that aggregate, the greater of, (i) such amount as the corporation may claim, not exceeding 20 per cent of the aggregate determined under clause (a), and (ii) the aggregate of, (A) such part of its income for the taxation year as may reasonably be regarded as attributable to the production of petroleum or natural gas from wells in Canada or to the production of minerals from mines in Canada, (B) its income for the taxation year from royalties in respect of an oil or gas well in Canada or a mine in Canada, and (C) the aggregate of amounts, each of which is an amount in respect of a Canadian resource property that has been disposed of by it, equal to the amount included in computing its income for the taxation year by virtue of subsection 15 (2) in respect of the disposition of the property, if no deduction were allowed for the taxation year under this subsection, subsection (3) or section 17.  R.S.O. 1990, c. C.40, s. 18 (2); 2004, c. 16, s. 2 (2). Ontario exploration and development expenses: corporation other than a principal-business corporation (3) A corporation other than a principal-business corporation may deduct, in computing its income for a taxation year, the lesser of, (a) the aggregate of such of its Ontario exploration and development expenses as were incurred by it before the end of the taxation year to the extent that they were not deducted in computing its income for a previous year, minus that portion of the deduction allowed, if any, in computing its income for the taxation year under subsection (2) which is reasonably attributable to Ontario exploration and development expenses; and (b) that portion of the amount determined under clause (a) equal to the amount of its income for the taxation year if no deductions were allowed under this section, minus, (i) that portion of the deduction allowed for the taxation year under subsection (2) which is reasonably attributable to Ontario exploration and development expenses, and (ii) the deduction allowed for the taxation year under sections 112 and 113 of the Income Tax Act
(Canada) as made applicable by section 34 of this Act.  R.S.O. 1990, c. C.40, s. 18 (3); 2004, c. 16, s. 2 (2). Dealers (4) Section 16 of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, and subsection 15 (2), subsections (2) and (3) of this section and sections 19 and 21 do not apply in computing the income for a taxation year under this Part of a corporation, other than a principal-business corporation, whose business includes trading or dealing in rights, licences or privileges to explore for, drill for or take minerals, petroleum, natural gas or other related hydrocarbons.  1994, c. 14, s. 6 (1); 2004, c. 16, s. 2 (2). Joint exploration corporation: renunciation of its exploration and development expenses in favour of shareholder corporation (5) The portion, if any, of its Canadian exploration and development expenses that a joint exploration corporation may renounce in favour of a shareholder corporation shall be determined in accordance with the rules provided in subsection 66 (10) of the Income Tax Act (Canada) and paragraphs (a) and (b) of the said subsection are applicable, except that for the purposes of this subsection, (a) the references in the said subsection to subsections (1) and (3) of that section shall be deemed to be references to subsections (1) and (2) of this section; and (b) the references in paragraph (b) of the said subsection to paragraph (1) (a) of that section shall be deemed to be a reference to clause (1) (a) of this section.  R.S.O. 1990, c. C.40, s. 18 (5); 2004, c. 16, s. 2 (2). Idem (6) Subsections 66 (10.1), (10.2), (10.3) and (10.4) of the Income Tax Act (Canada) are applicable for the purposes of this Act.  R.S.O. 1990, c. C.40, s. 18 (6); 2004, c. 16, s. 2 (2). Change in control (7) Subsections 66 (11) and (11.3) of the Income Tax Act (Canada), except paragraph 66 (11) (e), are applicable for the purposes of this Act.  R.S.O. 1990, c. C.40, s. 18 (7); 2004, c. 16, s. 2 (2). Idem (8) Subsections 66 (11.4) and (11.5) of the
Income Tax Act (Canada) are applicable for the purposes of this Act with respect to acquisitions of Canadian resource properties.  R.S.O. 1990, c. C.40, s. 18 (8); 2004, c. 16, s. 2 (2). Computation of exploration and development expenses (9) In computing the Canadian exploration and development expenses and Ontario exploration and development expenses of a corporation, (a) there shall be deducted the aggregate of all amounts paid to it after 1971 and before the 25th day of May, 1976, (i) under the Northern Mineral Exploration Assistance Regulations (Canada) made under an Appropriation Act (Canada) that provides for payments in respect of the Northern Mineral Grants Program, (ii) pursuant to any agreement entered into between the corporation and Her Majesty in right of Canada under the Northern Mineral Grants Program or the Development Program of the Department of Indian Affairs and Northern Development, or (iii) under the Mineral Exploration Assistance Program (Ontario), to the extent that the amounts have been expended by the corporation as or on account of Canadian exploration and development expenses or Ontario exploration and development expenses, as the case may be; and (b) there shall be included any amount, except an amount in respect of interest, paid by the corporation, after 1971 in respect of amounts paid to it before the 25th day of May, 1976, under the Regulations referred to in subclause (a) (i) to Her Majesty in right of Canada and under the Mineral Exploration Assistance Program (Ontario) to Her Majesty in right of Ontario.  R.S.O. 1990, c. C.40, s. 18 (9); 2004, c. 16, s. 2 (2). Limitations (10) Except as otherwise provided in this section or section 19, where a corporation has incurred an outlay or expense in respect of which a deduction from income is authorized under more than one provision of this section or section 19, the corporation is not entitled to make the deduction under more than one provision but is entitled to select the provision under which to make the deduction.  R.S.O. 1990, c. C.40, s. 18 (10); 2004, c. 16, s. 2 (2). Idem (11) Despite subsection (10), a corporation that is entitled to a deduction under both subsections (2) and (3) may, in addition to the deduction under subsection (2), deduct such additional amount as it may claim in respect of Ontario exploration and development expenses under subsection (3).  R.S.O. 1990, c. C.40, s. 18 (11); 2004, c. 16, s. 2 (2). Limitations of Canadian exploration and development expenses (12) Subsection 66 (12.1) of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said subsection applies to corporations, except that, in its application for the purposes of this Act, the reference in paragraph (a) thereof to “before May 7, 1974” shall be deemed to be a reference to “before the 20th day of May, 1981”.  R.S.O. 1990, c. C.40, s. 18 (12); 2004, c. 16, s. 2 (2). Unitized oil or gas field in Canada (13) Subsections 66 (12.2), (12.3) and (12.5) of the Income Tax Act (Canada) are, in so far as the said subsections apply to corporations, applicable for the purposes of this Act except that, in the application of the said subsection (12.2) for the purposes of this Act, the reference therein to “before May 7, 1974” shall be deemed to be a reference to “before the 20th day of May, 1981”.  R.S.O. 1990, c. C.40, s. 18 (13); 2004, c. 16, s. 2 (2). Amount deemed deductible under this Subdivision (14) For the purposes of section 9, any amount deductible under The Corporations Tax Application Rules, 1972 in respect of this section shall be deemed to be deductible under this Subdivision.  R.S.O. 1990, c. C.40, s. 18 (14); 2004, c. 16, s. 2 (2). Definitions (15) In this section and in sections 19, 20 and 21 and in the provisions of the Income Tax Act
(Canada) made applicable for the purposes of this Act, “agreed portion” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act
(Canada); (“partie convenue”) “assistance” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“montant à titre d’aide”) “Canadian exploration and development expenses” incurred by a corporation means any expense incurred before the 20th day of May, 1981 that is, (a) any drilling or exploration expense, including any general geological or geophysical expense, incurred by the corporation after 1971 on or in respect of exploring or drilling for petroleum or natural gas in Canada, (b) any prospecting, exploration or development expense incurred by it after 1971 in searching for minerals in Canada, (c) despite paragraph 18 (1) (m) of the Income Tax Act (Canada), as that paragraph applies to this Act for a taxation year ending before January 1, 2003 by virtue of subsection 11 (1) of this Act, the cost to the corporation of a Canadian resource property, but for greater certainty not including any payment made to any of the persons referred to in any of the subparagraphs (i) to (iii) of the said paragraph (m) for the preservation of a person’s rights in respect of a Canadian resource property or a property that would have been a Canadian resource property if it had been acquired by the corporation after 1971, and not including a payment to which the said paragraph (m) applied by virtue of subparagraph (v) thereof, (c.1) despite subsection 11.0.1 (5) of this Act, for taxation years ending after December 31, 2002, the cost to the corporation of a Canadian resource property, but for greater certainty not including any payment made to any of the persons referred to in clause 11.0.1 (5) (a) for the preservation of a person’s rights in respect of a Canadian resource property or a property that would have been a Canadian resource property if it had been acquired by the corporation after 1971, and not including a payment to which subsection 11.0.1 (5) applies by virtue of subclause 11.0.1 (5) (b) (ii), (d) the corporation’s share of any of the expenses referred to in clauses (a), (b) and (c) incurred after 1971 by any association, partnership or syndicate in a fiscal period thereof, if at the end of that fiscal period the corporation was a member or partner thereof, and (e) any expenses referred to in clauses (a), (b) and (c) incurred after 1971 pursuant to an agreement with another corporation under which the corporation incurred the expense solely in consideration for shares of the capital stock of the other corporation issued to it by the other corporation or any interest in such shares or right thereto, but for greater certainty, does not include, (f) any consideration given by the corporation for any share or any interest therein or right thereto, except as provided by clause (e), or (g) any expense described in clause (e) incurred by another person to the extent that the expense was, by virtue of clause (e), a Canadian exploration and development expense of that other person, but no amount of assistance or benefit that a corporation has received or is entitled to receive after the 25th day of May, 1976 in respect of or related to its Canadian exploration and development expenses made or incurred before the 1st day of January, 1981, from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, shall reduce the amount of any of the expenses described in any of clauses (a) to (e); (“frais d’exploration et d’aménagement au Canada”) “drilling or exploration expense” incurred on or in respect of exploring or drilling for petroleum or natural gas has the meaning given to that expression by subsection 66 (15) of the Income Tax Act
(Canada); (“frais d’exploration ou de forage”) “flow-through share” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada) and includes a share issued pursuant to an agreement entered into by a corporation after the 28th day of February, 1986 and before the 1st day of January, 1987 which qualifies as a “flow-through share” for the purposes of that Act; (“action accréditive”) “joint exploration corporation” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act
(Canada); (“société d’exploration en commun”) “oil or gas well” has the meaning given to that expression by subsection 248 (1) of the Income Tax Act (Canada); (“puits de pétrole ou de gaz”) “Ontario exploration and development expenses” incurred by a corporation means any expenses that would be Canadian exploration and development expenses incurred by the corporation if the definition of “Canadian exploration and development expenses” were read as if the references therein to, (a) “in Canada” were references to “in Ontario”, (b) “after 1971” were references to “after the 9th day of April, 1974 and before the 20th day of May, 1981”, and (c) “Canadian” were references to “Ontario”; (“frais d’exploration et d’aménagement en Ontario”) “Ontario resource property” of a corporation means any property acquired after the 9th day of April, 1974 and before the 20th day of May, 1981 that would be a Canadian resource property of the corporation within the meaning of paragraph 66 (15) (c) of the Income Tax Act
(Canada) if that paragraph were read as if the references therein to “in Canada” were references to “in Ontario”; (“avoir minier ontarien”) “original owner”, of a Canadian resource property, means the person who would be the “original owner” of that property under subsection 66 (15) of the Income Tax Act (Canada) if the definition of “original owner” in that subsection were read without the references therein to “foreign resource property”, “foreign exploration and development expenses” and to subsections 66 (2), (3) and (4) and 66.7 (2) and (13) of that Act; (“propriétaire obligé”) “outlay” or “expense” have the meaning given to those expressions by subsection 66 (15) of the Income Tax Act
(Canada); (“dépenses”) “predecessor owner”, of a Canadian resource property, means the person who would be the “predecessor owner” of that property under subsection 66 (15) of the Income Tax Act (Canada) if the definition of “predecessor owner” in that subsection were read without the references therein to “foreign resource property” and to subsections 66.7 (2) and (15) of that Act; (“propriétaire antérieur”) “principal-business corporation” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“société exploitant une entreprise principale”) “production”, from a Canadian resource property, has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada), except that with respect to iron ore, the production from a Canadian resource property means the iron ore produced from the property processed to any stage that is not beyond the prime metal stage or its equivalent; (“production”) “reserve amount” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act
(Canada); (“provision”) “selling instrument” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“avis d’émission”) “shareholder corporation” of a joint exploration corporation has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada). (“société actionnaire”) R.S.O. 1990, c. C.40, s. 18 (15); 1996, c. 29, s. 42; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 9. Application (16) For the purposes of subsection 1 (3.1), this section applies in lieu of section 66 of the Income Tax Act (Canada).  R.S.O. 1990, c. C.40, s. 18 (16); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 6. Section Amendments with date in force (d/m/y) 1994, c. 14, s. 6 (1, 2) - 17/12/1991; 1996, c. 29, s. 42 - 01/03/1994 2004, c. 16, s. 2 (2)
- 01/01/2004; 2004, c. 31, Sched. 9, s. 9 - 16/12/2004 2005, c. 28, Sched. D, s. 6 - 01/01/2003