an allowance in respect of an industrial mineral mine or a
right to mine an industrial mineral mine for a previous year. If
the taxpayer has not been granted an allowance or right for
a previous year, the rate is based on the capital cost of the
mine, the residual value of the mine, and the number of units
of commercially mineable material estimated as being in the
mine when the mine or right was acquired (or the number
of units subject to the right where a right to remove only a
specified number of units was acquired). Where an allowance
has been granted in a prior year, the same rate is used unless
it has been established that:
• the number of units of material remaining to be mined in
the previous taxation year was in fact different from the
quantity that was employed in determining the rate for the
most recent year for which an allowance was granted, or
• the capital cost of the mine or right is substantially different
from the amount that was employed in determining the rate
for the previous year.
The disposition of an industrial mineral mine is considered to
be on income account or on account of capital, depending on
the facts in the particular case.
Flow-Through Shares
The flow-through share provisions are an exception to the
basic scheme of the ITA providing that only the taxpayer that
incurs an expense may deduct the expense.
The concept of a flow-through share is that an investor enters
into an agreement with a principal-business corporation to
subscribe for shares of the corporation, and the corporation
uses the subscription funds to incur qualifying CEE or
qualifying CDE, which it then renounces to the investor.
In most arm’s-length situations, an investor will want only
CEE, because of the rapid write-off available for these
expenses in contrast to the comparatively slow write-off for
CDE. Therefore, in an arm’s-length agreement between the
corporation and the investor, the corporation will warrant that
it will incur CEE and renounce those expenses to the investor.
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Deductions, Allowances, and Credits
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