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Carried on"): Respecting the exclusion in Article XIII, paragraph 4 of the Canada-Netherlands Convention for property (other than rental property) in which the business of the company is carried on, RC stated that in its view "Oil & Gas reserves and royalty interests will be excluded from the definition of immovable property... if the owner is actively engaged in the exploitation of natural resources and if such assets are actively exploited or kept for future exploitation by such owner.... [A]s a general rule, in order for a company to be 'actively engaged' in the exploitation of natural resources, the company must be directly involved in the management and daily activities of the exploitation process on a regular, continuous and substantial basis, and the company's employees must devote time, work and energy to the exploitation. ...

29 November 2022 CTF Roundtable Q. 2, 2022-0950501C6- Section 116 and Taxable Canadian Property-- summary under Subsection 116(5) Summary Under Tax Topics- Income Tax Act- Section 116- Subsection 116(5) CRA generally will not provide advance guidance on TCP status The determination of whether for shares of a private corporation, interests in a partnership or interests in a trust are TCP can be complicated because it must be determined if at any time in the previous 60-month period more than 50% of the fair market value of the share or interest was derived directly or indirectly from real or immovable property, Canadian resource properties, timber resource properties and options or interests in these properties. ... Although the Income Tax Rulings program is there to provide advance comfort on the tax consequences of a transaction, as noted in IC70-6R12, CRA will not confirm the fair market value of a property, and the Rulings program is not in a position to verify the facts provided – and there are also timing considerations. ...

1 May 2017 Internal T.I. 2015-0624511I7- 248(1)(e)(ii) of the definition of TCP-- summary under Paaragraph 94(3)(c) Summary Under Tax Topics- Income Tax Act- Section 94- Subsection 94(3)- Paaragraph 94(3)(c) methodology for determining whether shares of NR corps indirectly holding some Cdn real property and resource properties through Opcos with interco loans were taxable Cdn property A non-resident trust (the “Trust”) took the position that its shares of various private non-resident corporations (“NRCos”) were not taxable Canadian property (“TCP”), so that it was deemed under s. 94(3)(c) to have acquired its NRCo shares at a cost equal to their fair market value (“FMV”). ... The Opcos held timber resource properties, Canadian real property, other properties not listed in the definition of TCP and, in some cases, shares of lower tier Opcos. ... However, recognizing an upstream loan would result in double counting because the assets acquired by the parent out of the proceeds thereof would already be counted for purposes of the tests – so that the loan’s value decreases the relevant FMV of the shares of the particular wholly-owned subsidiary. ...

The Directorate stated: Taking into account, among other things, the letter of intent and considering the final agreement as a whole, that there would be good arguments for concluding that a portion of the … expenses incurred by the Purchaser constituted consideration given by the taxpayer for a right in respect of a share of the Vendor... [T]hat consideration should be deducted by virtue of paragraph (j) … from Canadian exploration expenses otherwise computed. That portion of the costs incurred by the Purchaser would, however, be the cost to the Purchaser of the warrants …. ...

CRA generally will consider the expenses of the following types of environmental studies, community consultations and feasibility studies incurred by mining companies at the exploration stage for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada, to qualify as Canadian exploration expenses (“CEE”), subject to a review of the particular facts: Environmental assessments or community consultations undertaken to meet a legal or informal requirement to obtain a permit or to meet a requirement thereunder – but not (e.g., for community consultations) where undertaken prior to a decision to explore.) Environmental sampling/monitoring in relation to an exploration activity or targeted environmental assessments (e.g., vegetation, fisheries and water assessments) conducted in conjunction with a specific exploration activity – but not general baseline environmental assessments undertaken prior to carrying out a specific exploration activity. ... Planning for, and studies relating to, the conduct of the exploration; or physical and chemical assessments related to a deposit re deciding to continue the exploration at the site or to assessing the potential for a commercial deposit – but not preliminary planning prior to a decision to explore, or assessments of mine development options or profitability of developing the deposit into a mine. ...

CRA responded: FID is dependent on many things including a particular taxpayer’s circumstances, critical time path, availability of equipment, and resources. ... Consequently, the CRA does not accept that there is bright line test, such as FID, to determine the characterization of expenses for income tax purposes. … [E]xpenditures in respect of research in determining economic viability may be considered to be on income account.... ... If so, it is denied current deduction …. … The postponement or cancellation of a project does not alter the nature of an expense incurred in connection with such project. ...

16 June 2017 External T.I. 2016-0674541E5- Mineral Certification-- summary under Paragraph (f) Summary Under Tax Topics- Income Tax Act- Section 66.1- Subsection 66.1(6)- Canadian exploration expense- Paragraph (f) exploring a placer jade deposit did not qualify as CEE The Minister of Natural Resources advised CRA that nephrite (a type of jade) to be extracted from the in-situ deposits on the subject property was an industrial mineral contained in non-bedded deposits – but excluding placer nephrite deposits, which were considered to not qualify as “a mineral deposit in respect of which...the principal mineral extracted is an industrial mineral contained in a non-bedded deposit.” ...

Since the latter is paid following an examination of the participant's needs, resources and income, it is clear that the youth allowance constitutes a social assistance benefit under paragraph 56(1)(u). … [T]hey can also benefit from an offsetting deduction under paragraph 110(1)(f) so that those amounts are not taxed. ...

19 January 2018 External T.I. 2017-0683501E5- Flow-Through Shares-- summary under Subsection 40(12) Summary Under Tax Topics- Income Tax Act- Section 40- Subsection 40(12) non-flow through shares can be part of a flow-through share class A taxpayer subscribes cash for a publicly listed common share (the “Share”) of a resource company, and donates it to a qualified donee. ... However, it is necessary for the taxpayer to have acquired a flow-through share (or certain partnership interests …) in order for a taxpayer to have an exemption threshold in respect of a flow-through share class of property to which subsection 40(12) of the Act would apply. Accordingly, where a taxpayer has no exemption threshold … with respect to a flow-through share class of property, the deemed capital gain from a disposition of a capital property included in that flow-through share class of property referred to in subsection 40(12) would likely be zero …. ...

9 December 2020 External T.I. 2020-0852321E5- Flow Through Shares- Fees Paid to Promoter-- summary under Paragraph 6202.1(1)(b) Summary Under Tax Topics- Income Tax Regulations- Regulation 6202.1- Subsection 6202.1(1)- Paragraph 6202.1(1)(b) payment by a flow-through share issuer of fees for investor procurement services of an arm’s length promoter would not taint the shares as prescribed shares A principal-business corporation (the “Issuer”) issues publicly-listed shares pursuant to flow-through share agreements to individual investors (the “Investors”), who sell their shares to an end-purchaser (the “Liquidity Provider”) after the renunciation of eligible resource expenditures. ... Generally, we would not expect that the payment of an Offering Assistance Fee by the Issuer to the Promotor of a FTS offering would, in and by itself, cause shares issued under the FTS offering … [under] section 6202.1 … if the Offering Assistance Fee is paid in circumstances where all the parties involved in the FTS offering, namely the Issuer, the Investor, the Promotor and the Liquidity Provider, deal with one another at arm’s length and the amount of the Offering Assistance Fee is equal to the fair market value of the services for which it is paid. … [A]ll of the facts and circumstances surrounding a FTS offering would need to be considered in detail before concluding whether a particular share issued under that FTS offering is a prescribed share …. ...