Regulation 3900

Subsection 3900(1)

Administrative Policy

31 January 1992 Memorandum (Tax Window, No. 15, p. 16, ¶1678)

Penalties and interest on B.C. mining taxes are not deductible under s. 20(1)(v).

Subsection 3900(2)

Administrative Policy

1 December 2014 External T.I. 2014-0559451E5 - Deduction pursuant to paragraph 20(1)(v)

Quebec mining tax not deductible for portion of year ending with federal s. 249(4) year end

Canco, which mines in Quebec, has a calendar taxation year for purposes of the Act and the Quebec Mining Tax Act ("QMTA"), but has a deemed year end for federal but not QMTA purposes on August 31, 2014 as a result of an acquisition of control. Is the tax payable pursuant to the QMTA relating to operations that occurred from January 1, 2014 to August 31, 2014 deductible, pursuant to s. 20(1)(v), in computing the income of Canco for its taxation year that ended on August 31, 2014. CRA responded:

…Canco will not have any tax paid or payable pursuant to the QMTA for activities that occurred between January 1, 2014 and August 31, 2014. Indeed, for the purposes of the QMTA the basis for determining the amount of the liability of tax for a fiscal year is income for the entire fiscal year and must therefore be computed at the end of the fiscal year, which for the purposes of the QMTA is December 31, 2014. Therefore, the eligible tax payable by Canco, pursuant to the QMTA, for its fiscal year ending on December 31, 2014 should not be deductible for income tax purposes for its taxation year that is deemed to have ended on August 31, 2014.

…In computing Canco's income from a business (i.e. its Quebec mining operation) for its taxation year that includes December 31, 2014, there may be deducted, under paragraph 20(1)(v), such amount as is allowed by subsection 3900(2) of the Regulations that is applicable to that source of income (i.e. the Quebec mining operation).