Controlled foreign affiliate

A foreign affiliate is a controlled foreign affiliate if a Canadian 
resident owns more than 50% of the voting shares of the 
foreign affiliate, or would own more than 50% of the voting 
shares if it held all of the shares owned by related persons and 
up to four arm’s-length Canadian residents and persons related 
to them.

Corporation resident in 
Canada

Includes all corporations incorporated in Canada.

Cumulative Canadian 
development expense

See discussion on page 13.

Cumulative Canadian 
exploration expense

See discussion on page 13.

Cumulative Canadian oil and 
gas property expense

See discussion on page 14.

Cumulative eligible capital

Three-quarters of the cost of eligible capital property is added 
to cumulative eligible capital and three-quarters of the proceeds 
of disposition of eligible capital property is deducted from 
cumulative eligible capital. A taxpayer may claim a deduction of 
7% on a declining balance basis of its cumulative eligible capital.

Cumulative foreign resource 
expense

See discussion on page 14.

Depreciable property

Capital property the cost of which can be deducted from income 
over time. The amount that can be deducted in a year is limited 
to the capital cost allowance for the particular class of property.

Eligible capital expenditure

The cost of eligible capital property.

Eligible capital property

Consists of intangible capital property such as goodwill, 
franchises, incorporation fees, and customer lists.

Excluded property

Property the disposition of which by a foreign affiliate of a 
Canadian resident does not result in foreign accrual property 
income.

Exempt surplus

See discussion on page 38.

Farm-in/farm-out

See discussion on page 35 and following.

Farmee

A person who acquires an interest in a resource property of 
another person (the farmor) in consideration for funding or 
performing exploration and development work on the property. 

Farmor 

A person that has an interest in a resource property and grants 
an interest in that resource property to another person (the 
farmee) in consideration for the farmee’s either funding or 
performing exploration and development work on the property.

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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 A Guide to Canadian Mining Taxation