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

Marginal note:Definition of “proceeds of disposition”

• 6 (1) In this section, proceeds of disposition has, subject to subsection (4), the same meaning as in section 13 of the Income Tax Act.

• Marginal note:Definition of “cumulative enhanced recovery capital expense”

  (2) For the purposes of subsection 5(8), cumulative enhanced recovery capital expense of a taxpayer in respect of a particular prescribed project at any time in a taxation year means the amount, if any, by which the aggregate of

  • (a) the aggregate of all prescribed exploration and development expenses made or incurred by the taxpayer after 1982, before October 1986 and before that time in respect of the project,

  • (b) the amount by which the capital cost to the taxpayer of each property that is prescribed enhanced recovery equipment acquired by the taxpayer after 1982, before October 1986 and before that time for use in the project exceeds any amount included therein that is in respect of financing,

  • (c) the aggregate of all amounts in respect of the project required by paragraph 5(8)(b) to be included in computing the taxpayer’s production revenue for his taxation years ending before that time, and

  • (d) any amount referred to in paragraph (f), (g) or (h) that is established by the taxpayer to have become a bad debt before October 1986 and before that time

  exceeds the aggregate of all amounts each of which is

  • (e) any amount deductible by the taxpayer under paragraph 5(8)(a) for a taxation year ending before that time in respect of the project,

  • (f) any amount that became receivable by the taxpayer before that time, as a result of a transaction that occurred after 1982 and before October 1986 for which the consideration given by the taxpayer was property, other than a share or Canadian resource property or an interest therein or a right thereto, or services, the original cost of which to the taxpayer may reasonably be regarded as having been an expense referred to in paragraph (a) in respect of the project,

  • (g) any amount that is, in respect of a disposition before October 1986 and before that time of a property referred to in paragraph (b), the lesser of

    • (i) the proceeds of disposition of the property minus any outlays and expenses to the extent that they were made or incurred by the taxpayer for the purpose of making the disposition, and

    • (ii) the amount by which the capital cost to the taxpayer of the property exceeds any amount that is included therein that is in respect of financing,

  • (h) any amount that became receivable by the taxpayer after 1982, before October 1986 and before that time, in respect of an expense referred to in paragraph (a) in respect of the project, from another person pursuant to an agreement between the taxpayer and that other person to unitize the field in which the project is located,

  • (i) any amount received before October 1986 and before that time on account of any amount referred to in paragraph (d),

  • (j) any amount of assistance or benefit that the taxpayer has received or is entitled to receive before that time in respect of any expense referred to in paragraph (a) in respect of the project, whether the amount is by way of grant, subsidy, rebate, forgivable loan, deduction from royalty or tax, rebate of royalty or tax, investment allowance or any other form of assistance or benefit, or

  • (k) any amount of assistance or benefit that the taxpayer has received or is entitled to receive before that time in respect of the cost of property referred to in paragraph (b) in respect of the project, whether the amount is by way of grant, subsidy, rebate, forgivable loan, deduction from royalty or tax, rebate of royalty or tax, investment allowance or any other form of assistance or benefit, to the extent that the amount has not been deducted in determining the capital cost of the property.

• Marginal note:Where taxpayer member of partnership

  (3) For the purposes of subsection (2), where a taxpayer was a member of a partnership at the end of a fiscal period of the partnership,

  • (a) any property acquired or disposed of by the partnership shall be deemed to have been acquired or disposed of by the taxpayer to the extent of his share thereof;

  • (b) any property deemed by paragraph (a) to have been acquired or disposed of by the taxpayer shall be deemed to have been acquired or disposed of by him on the day the property was acquired or disposed of by the partnership;

  • (c) if the partnership has received, or is entitled to receive, an amount referred to in paragraph (2)(j) or (k), the taxpayer shall be deemed to have received, or to be entitled to receive, the amount to the extent of his share thereof, on the day the partnership received, or is entitled to receive, the amount;

  • (d) any expenditure incurred or expense recovered by the partnership shall be deemed to have been incurred or recovered, as the case may be, by the taxpayer to the extent of his share thereof;

  • (e) any expenditure or expense deemed by paragraph (d) to have been incurred or recovered, as the case may be, by the taxpayer shall be deemed to have been incurred or recovered by him on the day the expenditure was incurred or the expense was recovered by the partnership;

  • (f) if an amount referred to in paragraph (2)(f) or (h) has become receivable by the partnership, the amount shall be deemed to have become receivable by the taxpayer, to the extent of his share thereof, on the day the amount became receivable by the partnership;

  • (g) any amount referred to in paragraph (2)(f), (g) or (h) in respect of the partnership that is established by the partnership to have become a bad debt before a particular time shall be deemed to have become an amount referred to in that paragraph that was established by the taxpayer to have become a bad debt before the particular time to the extent of his share thereof; and

  • (h) any amount referred to in paragraph (2)(i) received by the partnership shall be deemed to be an amount referred to in that paragraph received by the taxpayer at the time it was received by the partnership to the extent of the taxpayer’s share thereof.

• Marginal note:Proceeds of disposition of property

  (4) For the purposes of subsection (2), where a taxpayer disposes of a property referred to in paragraph (2)(b), his proceeds of disposition shall be deemed to be the greater of

  • (a) his actual proceeds of disposition, and

  • (b) the fair market value of the property.

• Marginal note:Interpretation

  (5) For the purposes of subsection (6),

  former corporation

  former corporation means, in respect of

  • (a) an amalgamation of corporations, a “predecessor corporation” described in subsection 87(1) of the Income Tax Act, or

  • (b) a winding-up of a corporation, a “subsidiary” described in subsection 88(1) of the Income Tax Act; (personne morale remplacée)

  successor corporation

  successor corporation means, in respect of

  • (a) an amalgamation of corporations, a “new corporation” described in subsection 87(1) of the Income Tax Act, or

  • (b) a winding-up of a corporation, a “parent” described in subsection 88(1) of the Income Tax Act. (personne morale remplaçante)

• Marginal note:Rules where amalgamation or winding-up

  (6) Notwithstanding subsection (4), where at a particular time after December 31, 1982 there is an amalgamation of corporations within the meaning of subsection 87(1) of the Income Tax Act or a winding-up of a corporation as described in subsection 88(1) of that Act, the following rules apply for the purposes of subsection 5(8) and this section in respect of the successor corporation after the particular time:

  • (a) any prescribed exploration and development expense made or incurred by a former corporation shall be deemed to be a prescribed exploration and development expense made or incurred by the successor corporation at the time when the expense was made or incurred by the former corporation;

  • (b) any prescribed enhanced recovery equipment acquired by a former corporation shall be deemed to have been acquired by the successor corporation at the time when it was acquired by the former corporation, and that property shall be deemed to be prescribed enhanced recovery equipment acquired by the successor corporation at a capital cost to it equal to the capital cost of the property to the former corporation;

  • (c) any amount in respect of a particular prescribed project required by paragraph 5(8)(b) to be included in computing a former corporation’s production revenue for a taxation year of the former corporation shall be deemed to have been an amount in respect of the project required by paragraph 5(8)(b) to be included in computing the successor corporation’s production revenue for a taxation year of the successor corporation ending before the particular time;

  • (d) any amount referred to in paragraph (2)(f), (g) or (h) in respect of a former corporation that was established by a former corporation to have become a bad debt before the particular time shall be deemed to have been an amount referred to in that paragraph that was established by the successor corporation to have become a bad debt before the particular time;

  • (e) any amount in respect of a particular prescribed project that was deductible by a former corporation under paragraph 5(8)(a) for a taxation year of the former corporation shall be deemed to be an amount deductible in respect of the project by the successor corporation under paragraph 5(8)(a) for a taxation year of the successor corporation ending before the particular time;

  • (f) any amount referred to in paragraph (2)(f) or (h) in respect of a particular prescribed project that became receivable by a former corporation shall be deemed to be an amount referred to in that paragraph in respect of the project that became receivable by the successor corporation before the particular time;

  • (g) any amount referred to in paragraph (2)(g) in respect of a disposition by a former corporation shall be deemed to be an amount referred to in that paragraph in respect of a disposition by the successor corporation before the particular time;

  • (h) any amount referred to in paragraph (2)(i) received by a former corporation shall be deemed to be an amount referred to in that paragraph received by the successor corporation before the particular time;

  • (i) any amount of assistance or benefit referred to in paragraph (2)(j) or (k) that a former corporation has received or was entitled to receive shall be deemed to be an amount of assistance or benefit referred to in that paragraph that the successor corporation received or was entitled to receive before the particular time; and

  • (j) the successor corporation shall be deemed to have been in existence throughout the period in which the former corporation was in existence.

• Marginal note:Deemed disposition

  (7) For the purposes of this section, any transaction or event entitling a taxpayer to proceeds of disposition of property shall be deemed to be a disposition of that property by the taxpayer.

Marginal note:Income or loss from a source

• 7 (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.