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.
Principal Issues: 1. Whether a taxpayer can deduct the balance in the CCDE pool after the disposition of all resource properties?
Position: No
Reasons: The pool can only be deducted under the rules in subsection 66.2(2).
XXXXXXXXXX
2012-046384
J.Nichols
October 23, 2012
Dear XXXXXXXXXX:
RE: Cumulative Canadian Development Expense
This is in response to your email of September 27, 2012, wherein you requested whether a taxpayer who has disposed of all of its Canadian resource property may deduct any remaining balance in the taxpayer’s cumulative Canadian development expense (“CCDE”) pool as defined in subsection 66.2(5) of the Income Tax Act (the “Act”).
Our Comments
Written confirmation of the income tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request as described in Information Circular 70-6R5 dated May 17, 2002 issued by the Canada Revenue Agency. A fee is charged for this service. Although we are unable to provide any comments with respect to a particular fact situation otherwise than in the form of an advance income tax ruling, the following general comments may be of assistance.
Subsection 66.2(2) of the Act provides the amount that a taxpayer may deduct in a taxation year in respect of the taxpayer’s CCDE pool. There is no other provision in the Act that would permit a taxpayer to deduct any amount relating to the undeducted balance in its CCDE pool subsequent to the disposition of all of the taxpayer’s Canadian resource property. Consequently, the taxpayer will only be entitled to claim a 30% yearly deduction in respect of the balance in the CCDE pool at the end of the taxpayer’s taxation year.
We trust that our comments, provided in accordance with paragraph 22 of Information Circular 70-6R5, will be of assistance.
Yours truly,
Fiona Harrison, C.A.
Manager
Resources Section
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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