The Section 85 election: a useful device

"Canadian income tax legislation contains a number of provisions which serve to facilitate the structuring of business arrangements, including mineral resource ventures. These rules are often fairly complex and not easily understood. This article attempts to explain in plain and understandable language the mechanics and benefits of one of the more frequently encountered provisions, the ""Section 85 election"".IntroductionThe Canadian resource industries are probably singled out for more special attention under this country's tax legislation than any other industry. This special treatment is, of course, not always welcomed by the industry, such as where unnecessarily restrictive taxation is perceived to exist or where agonizingly complex tax legislation must be dealt with. On the other hand, certain provisions in the tax legislation treat the industry in a relatively favourable manner, including a number of rules which, in recognition of the high risk and capital requirements of the resource sector, serve to facilitate the structuring of resource ventures."