Rio Tinto found that investment dealer fees incurred in connection with an acquisition but before the board determined to make the acquisition were fully deductible. When asked about the deductibility of expenses incurred prior to the approval of a project (pre-Final Investment Decision, or “FID” expenses), CRA stated (without referring to Rio Tinto):
[T]he 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 … . The economic viability determination of a project may include preliminary designs for tangible assets and estimating capital and operating expenses.
There are a variety of activities undertaken subsequent to the preliminary economic viability study. These may include government approval, equipment specification, contract negotiations, stakeholder consultations, refinement of the economic viability study, etc. [If] … the expenditure brings into existence an asset or advantage that has an enduring benefit ... it is denied current deduction … .