CRA finds that a company that hauled (but did not cut) timber did not generate a logging tax credit

A hauling company transported the cut timber owned by another company from the cut block to the sawmill for volume-based fees.

Under s. 2 of the Logging Tax Act (B.C.), a taxpayer was required to pay logging tax equal to the lesser of 10% of its income derived from logging operations in BC and 150% of the credit that would have been allowable under s. 127(1) of the ITA.

The generating of the logging tax credit under s. 127(1) depended upon the taxpayer having “income for the year from logging operations in the province” as defined in Reg. 700(1), which was not the case for the hauling company because it did not cut or sell timber.

Accordingly, its logging tax credit (and, by implication, its B.C. logging tax) was nil.

Neal Armstrong. Summary of 19 November 2025 External T.I. 2025-1082241E5 under Reg. 700(1).