CRA indicates that the purchase price of a subsurface mineral exploration right was CDE

The definition of “Canadian oil and gas property expense” includes the cost of a right to explore for Canadian hydrocarbons, but the definition of “Canadian development expense” does not explicitly include the cost of a right to explore for Canadian mineral resources. CRA indicated (in the case of a taxpayer who was not in the exploration/mining business and who acquired subsurface mineral exploration rights) that the cost of purchasing those rights would qualify as CDE.

CRA also appeared to indicate that on the s. 85(1) transfer of a Canadian resource property with a nil balance in the relevant resource pool, a “nil” elected amount can be designated.

Neal Armstrong. Summaries of 7 February 2018 External T.I. 2016-0637221E5 under s. 66.2(5) – Canadian development expense and s. 85(1)(a).