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:
whether definition of "production" in 66(15) applies to 66.7 successor rules
Position:
yes
Reasons:
66.7(18)
970393
XXXXXXXXXX Denise Dalphy
(613) 957-9231
Attention: XXXXXXXXXX
March 4, 1997
Dear Sirs:
Re: Sections 66.7 of the Income Tax Act (the "Act")
This is in reply to your letter of February 12, 1997, wherein you requested our opinion relating to the concept of production from a particular property and the successor rules.
Pursuant to the provisions of subsection 66.7(18) of the Act, it is our view that the definition of "production" in subsection 66(15) of the Act applies to section 66.7 of the Act. Part (f) of the definition of "production" in subsection 66(15) of the Act would therefore be applicable in interpreting the word "production" in clauses 66.7(3)(b)(i)(C), 66.7(4)(b)(i)(B) and 66.7(5)(b)(i)(B) of the Act. Accordingly, it is our opinion that the successor's income that is received as a royalty computed by reference to the amount or value of the production of petroleum, natural gas or related hydrocarbons or ore from a particular property would be included in determining the deductions available to the successor under subsections 66.7(3),(4) and (5) of the Act.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Department. Our practise is to make this specific disclaimer in all instances in which we provide an opinion. If the fact situation described in your aforementioned letter relates to specific transactions and taxpayers, we would be pleased to give further consideration to this matter in the context of an advance income tax ruling.
Yours truly,
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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