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Attention: XXXXXXXXXX
Dear Sirs:
RE: Meaning of "Cost Amount"
This is in reply to your letter dated January 12, 1993 wherein you requested a technical interpretation concerning the meaning of the term "cost amount" in subclause 87(9)(c)(ii)(A)(I) of the Income Tax Act with respect to Canadian resource property.
We note that a similar question was addressed in the recent 1992 Canadian Petroleum Tax Society Round Table. While the question and the Department's response were specific to the "cost amount" of Canadian resource property for the purposes of paragraph 88(1)(d) of the Act, the Department's position is the same with respect to the "cost amount" of Canadian resource property for the purpose of paragraph 87(9)(c) of the Act. In our view the "cost amount" of a Canadian resource property is nil and this amount would not be affected by undeducted resource pools.
These comments are merely the expressions of opinion of those Revenue Canada officials named herein and as such should not be construed as advance income tax rulings, nor are they binding on the Department. Our practice is to make this specific disclaimer in all instances in which we provide an opinion. We refer you in this respect to paragraphs 21 and 22 of Information Circular 70-6R2.
Yours truly,
Section Chief Resource Industries, Partnerships and Trusts DivisionRulings Directorate