Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Canadian Exploration Expenses
Question 49
Is the Department of the view that Canadian exploration expenses ("CEE") that have been renounced to a shareholder corporation by a joint exploration corporation ("JEC") can then be renounced by the shareholder corporation to a third party under the terms of a flow-through share agreement?
Answer 49
Paragraph 66(10.1)(c) deems a shareholder corporation to have incurred expenses only for purposes of the CEE and cumulative CEE definitions in the Act and for no other purpose. The preambles of both subsections 66(10.1) and 66(12.6), pertaining to renunciations under the JEC and flow-through share provisions, respectively, require the expenses being renounced to have been factually incurred by the party making the renunciation. Clearly, the expenses renounced by the JEC have not been factually incurred by the shareholder corporation and equally clearly, the JEC provisions do not deem the expenses to have been incurred by the shareholder corporation for either of subsections 66(10.1) or 66(12.6).
Accordingly, it is the Department's view that a subsequent renunciation under either the JEC or the flow-through share provisions of the Act is not available to a shareholder corporation in respect of CEE renounced to it under paragraph 66(10.1)(c).
question no. 15 Canadian Tax Foundation
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