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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Will payments for property extracted from an individual's land be taxable.
Position: Yes.
Reasons: It-462 deals with payments based on production or use.
XXXXXXXXXX 2003-003449
August 29, 2003
Dear XXXXXXXXXX:
Subject: Payments for Shale Extracted from Land
We are writing in reply to your letter of May 23, 2003, which was received on August 12, 2003, wherein you requested our comments regarding the taxation of amounts that would be paid to your clients based on the amount of shale extracted from their property.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are subject matter of an Advance Income Tax Ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Since your letter deals with proposed transactions to be undertaken by specific taxpayers, we are unable to discuss the specific situation without the written authorization of the particular taxpayers. Consequently, we can only provide you with the following comments that are of a general nature only and are not binding on the Canada Customs and Revenue Agency ("CCRA"). All publications referred to herein can be accessed on the CCRA website at the following address: http://www.ccra-adrc.gc.ca/tax/technical/incometax/menu-e.html.
Where the purchase price for the property sold is based on the production or use of the particular property, other than an agricultural property, the amount received will be considered income from business or property pursuant to paragraph 12(1)(g) of the Act.
For further information about the application of paragraph 12(1)(g) of the Act, refer to the current version of Interpretation Bulletin IT-462, Payments Based on Production or Use.
We trust these comments will be of assistance.
Yours truly,
For Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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