THE TAX TREATMENT OF OIL AND GAS TRANSACTIONS

Abstract

This article outlines the principal features of Canadian income tax law as it applies to the petroleum industry. The author uses the American position as a point of comparison and refers to the usefulness of other comparative studies. He discusses the general topics of the tax treatment of profits derived from oil and gas production, the capital gains question, exploration and development costs, depletion allowances and transactional problems involving agreements for the development of natural resources in Canada. He also explores certain problems of company reorganization as they relate to the petroleum industry’s financial needs and its required use of the corporate form of business organization.