Section 65 — Income Tax Act: Allowance for oil or gas well, mine or timber limit

There may be deducted in computing a taxpayer’s income for a taxation year such amount as an allowance, if any, in respect of a natural accumulation of petroleum or natural gas, oil or gas well, mineral resource or timber limit, the processing of ore (other than iron ore or tar sands) from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent, the processing of iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or the processing of tar sands from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent as is allowed to the taxpayer by regulation. For greater certainty it is hereby declared that, in the case of a regulation made under subsection 65(1) allowing to a taxpayer an amount in respect of a natural accumulation of petroleum or natural gas, an oil or gas well or a mineral resource or in respect of the processing of ore, there may be allowed to the taxpayer by that regulation an amount in respect of any or all natural accumulations of petroleum or natural gas, oil or gas wells or mineral resources in which the taxpayer has any interest or, for civil law, right, or processing operations described in any of paragraphs 65(1)(b), (c) and (d) that are carried on by the taxpayer; and notwithstanding any other provision contained in this Act, the Governor in Council may prescribe the formula by which the amount that may be allowed to the taxpayer by that regulation shall be determined. Where a deduction is allowed under subsection 65(1) in respect of a coal mine operated by a lessee, the lessor and lessee may agree as to what portion of the allowance each may deduct and, in the event that they cannot agree, the Minister may fix the portions.