Mobil Oil Canada Ltd. v. Canada
T-1260-90 / T-1261-90 / T-1262-90 / T-1263-90
Nadon J.
8/10/99
30 pp.
Appeals from notices of reassessment issued by MNR in respect of taxpayer's taxation years 1977, 1978, 1979, 1980-Taxpayer, Mobil Oil Canada Ltd., exploring for, producing petroleum, natural gas-In respect of 1977, 1978, 1979, 1980 taxation years, Mobil remitted $551,034, $646,254, $731,526 and $822,178 respectively (remitted funds) to Province of Saskatchewan in satisfaction of obligations under The Road Allowances Crown Oil Act (RACOA)-By notices of confirmation, Minister confirmed notices of reassessment for taxation years 1977, 1978, denied Mobil's deductions in respect of remitted funds for 1979, 1980 taxation years-Whether Mobil required to include remitted funds in income under Income Tax Act, s. 12(1)(o), and if so required, whether Mobil entitled to corresponding deduction under Act, s. 18(1)(m)-Real issue whether remitted funds royalties, taxes, amounts that may reasonably be regarded as "being in lieu" of royalties, taxes-Under RACOA, s. 3, 1.88 per cent of oil coming out of well belongs to Saskatchewan Crown-Remitted funds royalties and, if not, "amounts" that may reasonably be regarded as being in lieu of royalties-Essential feature of royalty payment to owner of resource from production of that resource-Sums remitted by Mobil to Saskatchewan Crown under RACOA royalties, amounts paid in lieu of royalties-Amount "in lieu of royalty or tax" amount that partakes of essential features of royalty, tax-Funds remitted by Mobil under RACOA partake of essential features of royalty, in that owner of 1.88 per cent of recoverable oil from every producing reservoir requires from oil producers payment of 1 per cent of production-Remitted funds amounts in relation to acquisition, development, ownership of Canadian resource property, or in relation to production in Canada of petroleum-Said production from oil, gas well situated on property in Canada from which Mobil had, at time of production, right to take, remove petroleum-Under RACOA, owner of Canadian resource property required to pay 1 per cent of production to Crown-Remitted funds amounts in relation to ownership of Canadian resource property-Appeals dismissed-Income Tax Act, S.C. 1970, 71, 72, c. 63, ss. 12(1)(o) (as enacted by S.C. 1974-7576, c. 26, s. 4; 1976-77, c. 4, s. 2; 1977-78, c. 1, s. 5; 1980-81-82-83, c. 140, s. 4), 18(1)(m) (as enacted by S.C. 1974-75-76, c. 26, s. 7; 1976-77, c. 4, s. 4; 1977-78, c. 1, s. 11; 1980-81-82-83, c. 140, s. 11)-The Road Allowances Crown Oil Act, R.S.S. 1965, c. 53, s. 3.