Income Tax Act

Marginal note:Resource expenses of limited partner

• 66.8 (1) Where a taxpayer is a limited partner of a partnership at the end of a fiscal period of the partnership, the following rules apply:

  • (a) determine the amount, if any, by which

    • (i) the total of all amounts each of which is the taxpayer’s share of

      • (A) the Canadian oil and gas property expenses (in this subsection referred to as “property expenses”),

      • (B) the Canadian development expenses (in this subsection referred to as “development expenses”),

      • (C) the Canadian exploration expenses (in this subsection referred to as “exploration expenses”),

      • (D) the foreign resource expenses in respect of a country (in this subsection referred to as “country-specific foreign expenses”), or

      • (E) the foreign exploration and development expenses (in this subsection referred to as “global foreign expenses”),

      incurred by the partnership in the fiscal period determined without reference to this subsection

    exceeds

    • (ii) the amount, if any, by which

      • (A) the taxpayer’s at-risk amount at the end of the fiscal period in respect of the partnership

      exceeds

      • (B) the total of

        • (I) the total of all amounts required by subsections 127(8), 127.44(11), 127.45(8), 127.48(12) and 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer in respect of the fiscal period, and

        • (II) the taxpayer’s share of any losses of the partnership for the fiscal period from a farming business;

  • (b) the amount determined under paragraph 66.8(1)(a) shall be applied

    • (i) first to reduce the taxpayer’s share of property expenses,

    • (ii) if any remains unapplied, then to reduce the taxpayer’s share of development expenses,

    • (iii) if any remains unapplied, then to reduce the taxpayer’s share of exploration expenses,

    • (iv) if any remains unapplied, then to reduce (in the order specified by the taxpayer in writing filed with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which the fiscal period ends or, where no such specification is made, in the order determined by the Minister) the taxpayer’s share of country-specific foreign expenses, and

    • (v) if any remains unapplied, then to reduce the taxpayer’s share of global foreign expenses; and

    incurred by the partnership in the fiscal period; and

  • (c) for the purposes of subparagraph 53(2)(c)(ii), sections 66 to 66.7, subsection 96(2.1) and section 111, the taxpayer’s share of each class of expenses described in subparagraph 66.8(1)(a)(i) incurred by the partnership in the fiscal period shall be deemed to be the amount by which the taxpayer’s share of that class of expenses as determined under subparagraph 66.8(1)(a)(i) exceeds the amount, if any, that was applied under paragraph 66.8(1)(b) to reduce the taxpayer’s share of that class of expenses.

• Marginal note:Expenses in following fiscal period

  (2) For the purposes of subparagraph 66.8(1)(a)(i), the amount by which a taxpayer’s share of a class of expenses incurred by a partnership is reduced under paragraph 66.8(1)(b) in respect of a fiscal period of the partnership shall be added to the taxpayer’s share, otherwise determined, of that class of expenses incurred by the partnership in the immediately following fiscal period of the partnership.

• Marginal note:Interpretation

  (3) In this section,

  • (a) the expression limited partner of a partnership has the meaning that would be assigned by subsection 96(2.4), if in subsection 96(2.5) each reference to

    • (i) “February 25, 1986” were a reference to “June 17, 1987”,

    • (ii) “February 26, 1986” were a reference to “June 18, 1987”,

    • (iii) “January 1, 1987” were a reference to “January 1, 1988”,

    • (iv) “June 12, 1986” were a reference to “June 18, 1987”, and

    • (v) “prospectus, preliminary prospectus or registration statement” were a reference to “prospectus, preliminary prospectus, registration statement, offering memorandum or notice that is required to be filed before any distribution of securities may commence”;

  • (a.1) the expression at-risk amount of a taxpayer in respect of a partnership has the meaning that would be assigned by subsection 96(2.2) if paragraph 96(2.2)(c) read as follows:

    • (c) all amounts each of which is an amount owing at that time to the partnership, or to a person or partnership not dealing at arm’s length with the partnership, by the taxpayer or by a person or partnership not dealing at arm’s length with the taxpayer, other than any amount deducted under subparagraph 53(2)(c)(i.3) in computing the adjusted cost base, or under section 143.2 in computing the cost, to the taxpayer of the taxpayer’s partnership interest at that time, or any amount owing by the taxpayer to a person in respect of which the taxpayer is a subsidiary wholly-owned corporation or where the taxpayer is a trust, to a person that is the sole beneficiary of the taxpayer, and;

  • (b) a reference to a taxpayer who is a member of a particular partnership shall include a reference to another partnership that is a member if the particular partnership; and

  • (c) a taxpayer’s share of Canadian development expenses or Canadian oil and gas property expenses incurred by a partnership in a fiscal period in respect of which the taxpayer has elected in respect of the share under paragraph (f) of the definition Canadian development expense in subsection 66.2(5) or paragraph (b) of the definition Canadian oil and gas property expense in subsection 66.4(5), as the case may be, shall be deemed to be nil.