Tusk Exploration – Tax Court of Canada finds that Part XII.6 tax applies to CEE which is invalidly (as well as validly) renounced on a look-back basis

A Canadian exploration company argued that it was not subject to Part XII.6 tax on Canadian exploration expenses that it had purported to renounce under the look-back rule - but which were now admittedly not eligible for look back because the flow-through share investors were non-arm’s length – because the reference in Part XII.6 to CEE that it “purported” to renounce under the rule referred only to expenses which had been validly rather than invalidly renounced under the look-back rule.

This argument was doomed notwithstanding one non-tax English decision stating that “’purports’… means ‘has the effect of’.”

Neal Armstrong Summary of Tusk Exploration Ltd. v The Queen, 2016 TCC 238 under s. 211.91(1).