Does the exclusion from “accelerated Canadian development expense” (“Accelerated CDE”) for “a cost in respect of a Canadian resource property acquired by the taxpayer, or a partnership in which the taxpayer is a member, from a person or partnership with which the taxpayer does not deal at arm’s length” exclude drilling costs incurred on a property acquired from a related party, even if the drilling costs are paid to an arm’s length third party? CRA responded:
The CRA would generally not deny deductions for Accelerated CDE that are otherwise permitted to be deducted under the ITA for drilling or completion expenses, solely because they were incurred on lands acquired from a person with whom a taxpayer does not deal at arm’s length.