| 19(1) | File No. 5-8941 |
| J. Chan | |
| (613) 952-9019 |
November 23, 1989
Dear Sirs:
Re: Request for Technical Interpretation "Cost Amount" of Canadian Resource Property
We are writing in reply to your letter dated October 18, 1989, wherein you requested our interpretation of the meaning of "cost amount" of Canadian resource property for purposes of the Income Tax Act (the "Act").
As you indicate, the relevant provision of the Act to determining the cost amount of Canadian resource property is paragraph (f) of the definition of "cost amount" in subsection 248(1) which states that "cost amount" to a taxpayer of a property at any time means.
"in any other case, the cost to the taxpayer of the property as determined for the purpose of computing his income, except to the extent that such cost has been deducted in computing his income for any taxation year ending before that time;"
You submit that the foregoing definition should be interpreted such that the cost amount of Canadian resource property is equal to nil on the basis that no amount is deducted from the proceeds of disposition in determining the amount which is relevant for the purpose of computing a taxpayer's income for the year in which the disposition occurred.
COMMENTS
The Act does not provide for or require the identification of a cost amount in respect of any particular Canadian resource property for the purpose of computing a taxpayer's income. It provides only for the cumulative Canadian oil and gas property expense (CCOGPE).
Accordingly, it is our view that the cost amount of particular Canadian resource property is nil, rather than some portion of the CCOGPE for purposes of the Act.
The above comments are only expressions of opinion and as such should not be construed as advance income tax rulings, nor are they binding on the Department.
Yours truly,
Section ChiefResource Industries SectionBilingual Services and ResourceIndustries DivisionRulings Directorate