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Petroleum and Gas Revenue Tax Act (R.S.C., 1985, c. P-12)

Act current to 2024-05-14 and last amended on 2005-12-12. Previous Versions

PART IRevenue Tax (continued)

Tax and Computation (continued)

Marginal note:Income or loss from a source

  •  (1) Income or loss from a source described in section 5 does not include

    • (a) income or loss from transporting or transmitting petroleum or refining crude oil or its equivalent;

    • (b) income or loss from transporting, transmitting or processing gas, other than treating gas to remove water and other impurities;

    • (c) any amount on which tax under Part II is required to be deducted or withheld that is a resource royalty or that is a production royalty received after December 31, 1983;

    • (d) any amount required by section 13 of the Income Tax Act to be included in computing the taxpayer’s income for the year;

    • (e) with respect to

      • (i) Her Majesty in right of Canada or a province,

      • (ii) an agent of Her Majesty in right of Canada or a province, or

      • (iii) a corporation, commission or association, (other than a prescribed person), that is controlled directly or indirectly in any manner whatever by Her Majesty in right of Canada or a province or by an agent of Her Majesty in either right,

      a royalty, tax, lease rental or bonus received or receivable by a person described in subparagraph (i), (ii) or (iii) by virtue of an obligation imposed by statute or a contractual obligation substituted for an obligation imposed by statute;

    • (f) income or loss from the production of petroleum or gas from a prescribed oil or gas well;

    • (g) income or loss from the new deep production of petroleum or gas from a deepened well, other than a well located in a prescribed project or an approved recovery project;

    • (h) the portion of the income or loss that may reasonably be attributed to the production in a period after March 31, 1985 of petroleum or gas from an approved recovery project that is the exempt percentage of that income or loss for that period in respect of that project;

    • (i) the portion of the amount received or receivable as a production royalty or resource royalty, computed by reference to the amount or value of production in a period after 1985 of petroleum or gas from an approved recovery project, that is the exempt percentage of that amount for that period in respect of that project;

    • (j) an amount received or receivable as a production royalty or resource royalty computed by reference to the amount or value of production of petroleum or gas after 1985 from a prescribed oil or gas well; or

    • (k) the portion of the amount received or receivable as a production royalty or resource royalty, computed by reference to the amount or value of production after 1985 of petroleum or gas from a deepened well, other than a well located in a prescribed project or an approved recovery project, that is attributable to the new deep production from the well.

  • Marginal note:Separate projects included in prescribed project

    (2) For the purposes of

    • (a) the approval referred to in the definition “exempt percentage” in subsection 2(1), and

    • (b) paragraphs (1)(h) and (i) and 26(10)(a),

    where a particular prescribed project that is an approved recovery project referred to in paragraph (b) of the definition “approved recovery project” in subsection 2(1) includes any other project that, but for the existence of the particular project, would be a separate prescribed project, each such project shall be deemed to be a separate approved recovery project and income or loss from each such separate approved recovery project shall not include income or loss from the production of petroleum or gas not attributable to that separate project.

  • R.S., 1985, c. P-12, s. 7
  • R.S., 1985, c. 2 (2nd Supp.), s. 4

 [Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 5]

Marginal note:Amount of tax

  •  (1) The tax payable under this Part in respect of a taxpayer for a taxation year,

    • (a) where the taxation year ends in 1986, is the aggregate of

      • (i) the aggregate of

        • (A) 16% of the lesser of

          • (I) that portion of the production revenue of the taxpayer for the year that may reasonably be attributed to a period in the year before 1986, and

          • (II) the production revenue of the taxpayer for the year, and

        • (B) 13.33% of the amount, if any, by which the production revenue of the taxpayer for the year exceeds the aggregate of

          • (I) the lesser of the amounts determined under subclauses (A)(I) and (II), and

          • (II) that portion of the synthetic production revenue of the taxpayer for the year that may reasonably be attributed to a period in the year after 1985, and

      • (ii) 12% of the lesser of

        • (A) the amount determined under subclause (i)(B)(II), and

        • (B) the production revenue of the taxpayer for the year; and

    • (b) where the taxation year ends after 1986, is the aggregate of

      • (i) 13.33% of the lesser of

        • (A) the amount, if any, by which the production revenue of the taxpayer for the year exceeds the synthetic production revenue of the taxpayer for the year, and

        • (B) the production revenue of the taxpayer for the year, and

      • (ii) 12% of the lesser of

        • (A) the amount, if any, by which the production revenue of the taxpayer for the year exceeds the lesser of the amounts determined under clauses (i)(A) and (B), and

        • (B) the synthetic production revenue of the taxpayer for the year.

    • (c) and (d) [Repealed, R.S., 1985, c. 45 (2nd Supp.), s. 4]

  • Marginal note:Partnership revenue

    (2) Where the production revenue of a taxpayer for a taxation year includes a share of a partnership’s production revenue and

    • (a) the tax that would be payable under subsection (1) by the partnership on an amount equal to that share if the partnership were a person and its fiscal period were its taxation year,

    exceeds

    • (b) the tax that would, but for this subsection, be payable under subsection (1) by the taxpayer for that taxation year of the taxpayer computed on the assumption that he had no income other than that share and was allowed no deduction under subsection 5(3.2) for the year,

    the excess shall be added to the tax otherwise payable by the taxpayer under this Part for the year.

  • Marginal note:Trust revenue

    (3) Where a corporation has included an amount in computing its production revenue for a taxation year by virtue of subsection 5(5) or (5.1) and

    • (a) the tax that the corporation is deemed by subsection 5(6) to have paid for the year in respect of that amount,

    exceeds

    • (b) the tax that would, but for this subsection, be payable by the corporation for the year under subsection (1), computed on the assumption that the corporation had no income other than that amount,

    the excess shall be added to the tax otherwise payable by the corporation under this Part for the year.

  • (4) [Repealed, R.S., 1985, c. 2 (2nd Supp.), s. 6]

  • Marginal note:Deduction

    (5) There may be deducted from the tax otherwise payable by a taxpayer on his production revenue for a taxation year, an amount not exceeding the exploration and development expense tax credit of that taxpayer at the end of the year.

  • Marginal note:Definition of “exploration and development expense tax credit”

    (6) For the purposes of this section, exploration and development expense tax credit of a taxpayer at the end of a taxation year means the amount, if any, by which

    • (a) the aggregate of all amounts each of which is an amount that the taxpayer

      • (i) would have been eligible to receive in respect of outlays or expenses made or incurred by him before the end of the taxation year under a prescribed program of the Government of Canada or of a province providing incentives for the exploration for and development of petroleum and gas in Canada, and

      • (ii) has waived his entitlement to receive, in accordance with the applicable provisions of that program, on or before the date he is required to file a return of production revenue pursuant to section 11 for the taxation year

    exceeds

    • (b) the aggregate of all amounts, if any, each of which was an amount deducted under subsection (5) from the tax payable under this Part by the taxpayer for any preceding taxation year.

  • Marginal note:Amalgamations

    (7) Where after 1980 there has been an amalgamation within the meaning of subsection 87(1) of the Income Tax Act and one or more of the predecessor corporations referred to in that subsection had an exploration and development expense tax credit, for the purposes only of determining the exploration and development expense tax credit of the new corporation referred to in that subsection, the new corporation shall be deemed to be the same corporation as, and a continuation of, each such predecessor corporation.

  • Marginal note:Winding-up

    (8) Where after 1980 there has been a winding-up described in subsection 88(1) of the Income Tax Act and the subsidiary referred to in that subsection had an exploration and development expense tax credit, for the purposes only of determining the exploration and development expense tax credit of the parent referred to in that subsection, the parent shall be deemed to be the same corporation as, and a continuation of, the subsidiary.

  • Marginal note:Refund of tax credit

    (9) Where the exploration and development expense tax credit of a taxpayer at the end of a taxation year exceeds the amount deducted under subsection (5) from the tax payable under this Part by him for the year, the taxpayer may, by filing an election in prescribed form with the Minister within three years after the end of the year, elect to have this subsection apply to the taxpayer for the year in respect of the amount, not exceeding the excess, set out in the election and, in that case, the following rules apply:

    • (a) the taxpayer shall be deemed to have paid, on the day the election is filed with the Minister, the amount set out in the election on account of the taxpayer’s tax payable under this Part for the year; and

    • (b) for the purpose of computing the taxpayer’s exploration and development expense tax credit at the end of any subsequent taxation year, the amount set out in the election shall be deemed to have been deducted under subsection (5) from the tax payable under this Part by the taxpayer for the year for which the election was filed.

  • Marginal note:Replacing election

    (10) Where a taxpayer has made an election under subsection (9) for a taxation year, the taxpayer shall not make another election under that subsection for that year.

  • R.S., 1985, c. P-12, s. 9
  • R.S., 1985, c. 2 (2nd Supp.), s. 6, c. 45 (2nd Supp.), s. 4

Marginal note:Credit deductions

  •  (1) Where a taxpayer is a corporation, there may be deducted from the tax otherwise payable (computed without reference to subsections (7) and 9(5)) by it on its production revenue for a taxation year, an amount equal to the aggregate of

    • (a) the lesser of

      • (i) the tax that would otherwise be payable by the corporation under this Part on its production revenue for the year if the reference to “production revenue” in section 9 were read as “eligible production revenue”, and

      • (ii) the corporation’s credit limit for the taxation year,

    • (b) in respect of the taxation year of the corporation that ends in 1985, the lesser of

      • (i) the amount of tax determined under subparagraph (a)(i) for the year that may reasonably be attributed to the eligible production revenue for the period in the year commencing after December 31, 1984, and

      • (ii) that proportion of the corporation’s allocated limit for the year that the number of days after December 31, 1984 in the year is of three hundred and sixty-five, and

    • (c) in respect of the taxation years of the corporation that end after 1985, the least of

      • (i) the amount of tax determined under subparagraph (a)(i) for the year on that portion of its eligible production revenue for the year that may reasonably be attributed to production in the period in the year commencing May 1, 1986,

      • (ii) three times that proportion of the corporation’s allocated limit for the year that the number of days after April 1986 and before October 1986 in the year is of three hundred and sixty-five, and

      • (iii) the amount, if any, by which the tax determined under subparagraph (a)(i) for the year exceeds the amount determined under paragraph (a) for the year.

  • Marginal note:Definition of “credit limit”

    (2) For the purposes of subsection (1), the credit limit of a corporation for a taxation year is that proportion of the corporation’s allocated limit for the year that the number of days before October 1986 in the year is of three hundred and sixty-five.

  • Marginal note:Definition of “allocated limit”

    (3) For the purposes of subsections (1) and (2), the allocated limit of a corporation for a taxation year in which the corporation

    • (a) is not associated with one or more other corporations, is

      • (i) two hundred and fifty thousand dollars where the year ends before 1986, or

      • (ii) five hundred thousand dollars where the year ends after 1985; and

    • (b) is associated with one or more other corporations, is the amount allocated to the corporation under subsection (4) or (5).

  • Marginal note:Idem

    (4) The corporations in a group that, in a taxation year, are associated with each other may file with the Minister in prescribed form an agreement whereby, for the purpose of this section, they allocate an amount to one or more of them for the year, which amount or the aggregate of which amounts, as the case may be, is

    • (a) two hundred and fifty thousand dollars for the year ending before 1986; or

    • (b) five hundred thousand dollars for the year ending after 1985.

  • Marginal note:Idem

    (5) If any of the corporations in a group referred to in subsection (4) fails to file with the Minister an agreement as contemplated by that subsection within thirty days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax for a taxation year under this Part, the Minister shall, for the purpose of this section, allocate an amount to one or more of them for the year, which amount or the aggregate of which amounts, as the case may be, is an amount referred to in paragraph (4)(a) or (b), as the case may be.

  • Marginal note:Definition of “eligible production revenue”

    (6) For the purposes of this section, the eligible production revenue of a corporation for a taxation year is the aggregate of all amounts each of which is

    • (a) the amount that would be the production revenue for the year of the corporation, other than an amount, if any, included therein by virtue of subsection 5(5) or (5.1) or by virtue of the corporation being a member of a partnership, that may reasonably be attributed to the period in the year commencing after May 31, 1982, if

      • (i) subsection 5(1) were read without reference to paragraph (c) thereof,

      • (ii) the reference in paragraph 5(1)(d) to “paragraph (a), (b) or (c)” were read as a reference to “paragraph (a) or (b)”, and

      • (iii) the reference to “a production royalty” in paragraph 5(1)(f) were read as a reference to “production royalty in respect of production of petroleum or gas of the corporation”;

    • (b) the amount that would be the production revenue included in the income for the year of the corporation by virtue of the corporation being a member of a partnership that may reasonably be attributed to the period in the year commencing after the later of May 31, 1982 and the date the corporation first became a member of the partnership, if

      • (i) subsection 5(1) were read without reference to paragraph (c) thereof,

      • (ii) the reference in paragraph 5(1)(d) to “paragraph (a), (b) or (c)” were read as a reference to “paragraph (a) or (b)”, and

      • (iii) the reference to “a production royalty” in paragraph 5(1)(f) were read as a reference to “production royalty in respect of production of petroleum or gas of the partnership”;

    • (c) the amount that is deemed by subsection 5(5) to be production revenue of the corporation for the year; or

    • (d) the lesser of

      • (i) the amount by which the production revenue of the corporation for the year exceeds the aggregate of the amounts determined under paragraphs (a) to (c) in respect of the corporation for the year, and

      • (ii) its royalty exemption limit for the year.

  • Marginal note:Royalty exemption limit

    (6.1) For the purposes of subparagraph 10(6)(d)(ii), the royalty exemption limit of a corporation for a taxation year is that proportion of the corporation’s allocated exemption limit for the year that the number of days after 1985 and before October 1986 in the year is of three hundred and sixty-five.

  • Marginal note:Allocated exemption limit

    (6.2) For the purposes of subsection (6.1), the allocated exemption limit of a corporation for a taxation year is

    • (a)  $2,000,000, where the corporation is not associated in the year with one or more other corporations; or

    • (b) the amount allocated to the corporation under subsection (6.3) or (6.4), where the corporation is associated in the year with one or more other corporations.

  • Marginal note:Allocation of exemption limit

    (6.3) The corporations in a group that, in a taxation year, are associated with each other may file with the Minister in prescribed form an agreement whereby, for the purpose of paragraph (6.2)(b), they allocate an amount to one or more of them for the year, which amount or the aggregate of which amounts, as the case may be, is $2,000,000.

  • Marginal note:Failure to file agreement

    (6.4) If any of the corporations in a group referred to in subsection (6.3) fails to file with the Minister an agreement, as contemplated by that subsection, within thirty days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax for a taxation year under this Part, the Minister shall, for the purpose of paragraph (6.2)(b), allocate an amount to one or more of them for the year, which amount or the aggregate of which amounts, as the case may be, is $2,000,000.

  • Marginal note:Other deduction by corporation

    (7) Where a taxpayer is a corporation, there may be deducted from the tax otherwise payable (computed without reference to subsection 9(5)) by it on its production revenue for a taxation year, an amount not exceeding 30% of the aggregate of the amounts added in computing its cumulative offset account within the meaning of subsection 66.5(2) of the Income Tax Act in the year pursuant to subsections 66(14.1) and (14.2) of that Act.

  • R.S., 1985, c. P-12, s. 10
  • R.S., 1985, c. 2 (2nd Supp.), s. 7, c. 45 (2nd Supp.), s. 5
 

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