Deduction of Exploration and Development Expenses

CIM Bulletin, Vol. 71, No. 791, 1978

R. D. Brown, F.C.A., Price Waterhouse & Co., Toronto, Ontario

In view of the many changes which have taken place since 1950 in the rules of the Income Tax Act concerning the deduction of exploration and development expenses, many corporate taxpayers each year face the tedious task of determining which particular rules their unclaimed exploration and development expenses are subject to and in what sequence these expenses are to be claimed. Recent amendments to the Act have cleared up some of the mystery of the "ordering" of these deductions. This article examines the sequence in which various categories of exploration and development expenses are to be deducted in accordance with the terms of the Act as amended by Bill C-11.