Section 59.1 — Income Tax Act: Involuntary disposition of resource property

Where in a particular taxation year an amount is deemed by subsection 44(2) to have become receivable by a taxpayer as proceeds of disposition described in paragraph (d) of the definition proceeds of disposition in section 54 of any Canadian resource property and the taxpayer elects, in the taxpayer’s return of income under this Part for the year, to have this section apply to those proceeds of disposition, there shall be deducted in computing the taxpayer’s income for the particular year such amount as the taxpayer may claim, not exceeding the least of, the total of all those proceeds so becoming receivable in the particular year by the taxpayer to the extent that they have been included in the amount referred to in paragraph (a) of the description of F in the definition cumulative Canadian development expense in subsection 66.2(5) or in paragraph (a) of the description of F in the definition cumulative Canadian oil and gas property expense in subsection 66.4(5) in respect of the taxpayer, the amount required to be included in computing the taxpayer’s income for the particular year by virtue of paragraph 59(3.2)(c), and the taxpayer’s income for the particular year determined without reference to this section; the amount, if any, by which the amount deducted under paragraph 59.1(a exceeds the total of such of the Canadian exploration expenses, Canadian development expenses and Canadian oil and gas property expenses made or incurred by the taxpayer in the taxpayer’s ten taxation years immediately following the particular year as were designated by the taxpayer in the taxpayer’s return of income for the year in which the expense was made or incurred, shall be included in computing the taxpayer’s income for the particular year and, notwithstanding subsections 152(4) and 152(5), such reassessment of the taxpayer’s tax, interest or penalties for any year shall be made as is necessary to give effect to the inclusion; and any Canadian exploration expense, Canadian development expense or Canadian oil and gas property expense made or incurred by the taxpayer and designated in the taxpayer’s return of income in accordance with subparagraph 59.1(b(ii) shall (except for the purposes of subsections 66(12.1), 66(12.2), 66(12.3) and 66(12.5) and for the purpose of computing the taxpayer’s earned depletion base within the meaning assigned by regulations made for the purposes of section 65) be deemed not to be a Canadian exploration expense, a Canadian development expense or a Canadian oil and gas property expense, as the case may be, of the taxpayer.