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.
SEISMIC PROPERTY
QUESTION 12
Can seismic property ever be anything other than a Canadian exploration expense, such as inventory or eligible capital property? (A similar question was asked at the CPTS Roundtable in 1988, and the response was that the matter was before the courts: could Revenue Canada please cite the relevant case if the matter has in fact been considered by the courts?)
DEPARTMENT'S POSITION
The case that was referred to in our 1988 response was similar to the Fulcrum case, (1986) A. J. No. 5119 (Alta. C.A.), and was settled out of court.
Accordingly, the Department's position continues to be that if the purchaser is acquiring seismic data for use in its own exploration business and has the capability to use it, we will view the cost of the acquisition as Canadian exploration expense even though there may be a secondary intention to sell the data. If these criteria are not met and the purchaser is acquiring seismic data for resale, we have viewed the cost as not being CEE but as being the cost of an inventory item. Whether or not the cost of seismic data qualifies as Canadian exploration expense pursuant to 66.1(6)(a)(i) is a question that is determined based on the facts and circumstances that are present with respect to the particular transaction and the purchaser.
CPTS June 17, 1993
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