4 May 1994 External T.I. 9403675 - REHABILITATION COSTS

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.

Please note that the following document, although believed
to be correct at the time of issue, may not represent the
current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis,

peut ne pas représenter la position actuelle du ministère.

Principal Issues:

1. Whether levies paid to a province to secure

rehabilitation of a pit site area are deductible?

2. Whether the costs of rehabilitation of a pit site

area are deductible?

Position TAKEN:

1. Not deductible where the deposits do not become the

absolute property of the province.

2. The matter is under review.

Reasons FOR POSITION TAKEN:

1. Q.1 1991 Mining Steering Committee Meeting
Q.42 CPTS June 17, 1993

5-940367
XXXXXXXXXX Robert Gagnon

Attention: XXXXXXXXXX

May 4, 1994

Dear Sirs:

Re: Rehabilitation Costs

This is in reply to your letter of February 8, 1994 wherein you requested a technical interpretation concerning the tax
treatment of rehabilitation costs and levies paid to a Province to secure rehabilitation of a pit site area.

The Department's position is that levies paid to a Province in a taxation year to secure rehabilitation of a pit site
area are not deductible for the taxation year where the deposits do not become the absolute property of the province. This view is supported by the Federal Court of Appeal decisions Burnco Industries Ltd. 84 DTC 6348 and Nomad Sand and Gravel Limited 91 DTC 5032.

While the income tax treatment of an incurred rehabilitation cost is a question of fact, the matter is being reviewed and
any comment on the treatment of incurred expenses would be inappropriate at this time.

We will advise you of our positions as soon as our study is completed.

The foregoing opinions are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate