CRA confirms that accelerated CDE deductions can be available for drilling on land acquired from an affiliate

S. 66.2(2) provides an increased deduction for Canadian development expense incurred after November 20, 2018 – but with an exclusion for “a cost in respect of a Canadian resource property acquired by the taxpayer … from a person or partnership with which the taxpayer does not deal at arm’s length.” When asked, CRA confirmed that this exclusion would not apply to amounts paid to an arm’s length party for “drilling or completion expenses, solely because they were incurred on lands acquired from a person with whom a taxpayer does not deal at arm’s length.”

Neal Armstrong. Summary of 6 June 2019 CPTS Roundtable, 2019-0816111C6, Q.6 under s. 66.2(5) – accelerated CDE – (a)(ii).