S. 32 of the Quebec Mining Duties Act (MDA) provided a credit to an operator equal generally to an amount not exceeding 12% of the lesser of (i) its annual loss (excluding the portion thereof attributable to ore processing activities) and (ii) the amount by which the expenses in respect of exploration, mineral deposit evaluation and mine development work, incurred by the operator for the fiscal period in connection with the mining operation, exceeds the amount of government assistance that the operator received or was entitled to receive relating to those expenses.
In finding that this credit was not required to be included in income under s. 12(1)(x.2), CRA stated:
[T]here appears to be no relationship between the RDCL and the amount of duty that the taxpayer must pay, will pay or has had to pay by virtue of the MDA. … The fact of incurring a loss is the only real condition to be satisfied in order to claim an RDCL amount. Consequently, an RDCL amount received by a taxpayer would not be an amount received in respect of an amount receivable by Her Majesty in right of the Province of Quebec under the MDA or any other Act.