FEDERAL REG

SOR/2016-276: Regulations Amending the Income Tax Regulations (Canadian Oil and Gas Exploration Expense)

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
October 21, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The definition of “Canadian oil and gas exploration expense” in subsection 1206(1) of the Income Tax Regulations (the Regulations) refers to various provisions of the Income Tax Act (the Act). In 1985, many provisions of the Act were renumbered. The renumbering resulted in the definition containing cross-... (Click for more)


Published on October 21, 2016

Bill Summary

SOR/2016-276: Regulations Amending the Income Tax Regulations (Canadian Oil and Gas Exploration Expense)

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The definition of “Canadian oil and gas exploration expense” in subsection 1206(1) of the Income Tax Regulations (the Regulations) refers to various provisions of the Income Tax Act (the Act). In 1985, many provisions of the Act were renumbered. The renumbering resulted in the definition containing cross-references to provisions of the Act that are incorrect. The cross-references in the French version of the definition have been updated; however, they have not been updated in the English version. Consequently, the English and French versions of the definition are inconsistent. In a 2008 letter to the Department of Finance, the Standing Joint Committee for the Scrutiny of Regulations (the SJCSR) identified this inconsistency. Background Part XII of the Regulations provides for the determination of the resource and processing allowances (expenses that can be claimed as deductions) for the purposes of computing the income of a taxpayer in the natural resource sector (oil, natural gas and mining). Section 1206 provides definitions for various terms applicable to Part XII of the Regulations, including the definition of “Canadian oil and gas exploration expense.” The Canadian oil and gas exploration expense of a taxpayer is defined as an outlay or expense made or incurred after 1980 that would be a Canadian exploration expense of the taxpayer within the meaning of paragraph 66.1(6) of the Act, with certain exceptions as outlined in the Regulations. Objective The objective of the amendments is to address the SJCSR’s recommendation and to ensure consistency in the wording of the definition of “Canadian oil and gas exploration expense” in both the English and the French versions of the Regulations. Description The amendments update the definition of “Canadian oil and gas exploration expense” in subsection 1206(1) of the Regulations by correcting the cross-references to the various provisions of the Act within the definition. These amendments are housekeeping and technical in nature. Consultation Given the non-substantive nature of these amendments, consultations were not undertaken. “One-for-One” Rule The “One-for-One” Rule does not apply to these amendments because they do not increase or decrease administrative burden imposed on business. Small business lens The small business lens does not apply to these modifications because they do not impose any compliance or administrative costs on small businesses. Rationale This amendment responds to an issue raised by the SJCSR. There is no other alternative other than to amend these Regulations to achieve this objective. There are no costs associated with the amendments, as they are minor and technical in nature. There will be no changes to the taxes payable by any taxpayer as a result of these amendments. Implementation, enforcement and service standards The Act provides the necessary compliance mechanisms. These mechanisms allow the Minister of National Revenue to assess and reassess tax payable, conduct audits and seize relevant records and documents. Since these amendments have no impact on the calculation of taxes payable by a taxpayer, no additional mechanisms or resources are needed to ensure compliance with the amended definition. The Canada Revenue Agency will continue to use its existing enforcement and compliance tools. Contact Gurinderpal Grewal Senior Advisor Tax Legislation Division Tax Policy Branch Department of Finance 90 Elgin Street Ottawa, Ontario K1A 0G5 Telephone: 613-369-3667 Email: [email protected] Footnote a S.C. 2007, c. 35, s. 62 Footnote b R.S., c. 1 (5th Supp.) Footnote 1 C.R.C., c. 945

This Bill does not amend any statutes.

Sign up for alerts on this Bill

Receive emails tracking this Bill's progress.

See all your alerts in a dashboard.

Set an alert with one click and you're done!