C. Keys (613)995-1178
July 10, 1986
Dear Sir,
We are writing in response to your letter of May 6, 1986 wherein you requested our views on the deduction of mining exploration depletion by an individual taxpayer. Your specific concern was whether said deduction could be taken on a discretionary basis by such a taxpayer.
The deduction for mining exploration depletion as provided for under section 65 of the Income Tax Act (the "Act") and subsection 1203(1) of the Regulations to the Act is in our view wholly discretionary for an individual taxpayer. You will note in this regard that both of the above provisions in their preamble use the phrase "may be deducted". Furthermore, the mining exploration depletion base as defined and computed pursuant to subsection 1203(2) of the Regulations to the Act is only reduced by amounts actually deducted pursuant to subsection 1203(1) of those Regulations. Therefore, the base is preserved in the event a taxpayer decides to forgo a deduction in a given year.
We trust the above discussion is of assistance.
Yours truly,
for Director bilingual Services and Resource Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch