[Mccree]

Originally Posted by Cowboy89

Every industry has it's own nuances and thus many types of legislation and subsidies is in place for numerous industries. Oil and gas isn't the only 'special industry'. As for exploration, the reason why there is legislation allowing companies to save on exploration taxes is to balance off the Capital Cost Allowance disadvantage to other industries. For many manufacturing companies when they buy new equipment, bulidings, and any other asset etc. to improve production of their goods they are allowed a tax savings called a 'Capital Cost Allowance.' For an oil and gas company their assets aren't equpiment, but rather rights to oil and gas in the ground. How do they expand and find these additions to their asset base? They explore, shoot siesmic, drill some wells, to prove up their main assets. The equipment and the workers used to do this process are provided by contractors and they usually don't own the equipment.When a traditional company expands their business they build a new factory, add a new machine, buy more computers etc. They are allowed CCA deductions for these assets, so why can't an oil and gas company deduct expenditures related to finding more reserves which are also depreciable assets? And BTW there are also other examples of this same kind of 'break' or 'subsidy' in other industries such as mining, real estate, among others.

True but explortaion costs are 100% deductable where as new equipment etc.. you get a percentage each year.