Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether certain revisions to the transactions detailed in our file 2004-005784 would alter our opinion regarding the ability of each of three wind turbines to qualify as a "test wind turbine" for purposes of CRCE under proposed amendments to section 1219 of the Regulations.
Position: No. Provided the amendments come into force as proposed and the taxpayer proceeds with the development of the wind farm projects under the revised plan, each of the wind turbines would so qualify.
Reasons: Based upon the wording of the proposed amendments, written opinions received from Natural Resources Canada and the facts of the situation.
2004-010162
XXXXXXXXXX A. A. Cameron
(613) 347-1361
November 15, 2004
Dear XXXXXXXXXX:
Re: Wind Farm Projects
We are writing further to your electronic mail message of November 4, 2004, as well as your facsimile of November 6, 2004, setting out certain changes relating to the proposed wind farm projects that were the subject of our letter of July 19, 2004 (our file 2004-005784, the "Opinion"). In particular, the Opinion concerned the eligibility of each of three planned wind turbines to be installed by XXXXXXXXXX (the "Corporation") as a "test wind turbine" within the meaning of the proposed amendments to subsection 1219(3) of the Income Tax Regulations (the "Regulations"), described in News Release 2002-063 issued by the Department of Finance on July 26, 2002 (the "Proposed Amendments").
The Corporation continues to pursue the development of three wind farm projects involving wind turbines at three separate locations in XXXXXXXXXX (the "Projects") and will own all the wind turbines relating to each of the Projects. One of the three wind turbines referred to above (collectively referred to herein as the "Wind Turbines") will now be located at each of the following sites:
XXXXXXXXXX.
The revised planned nameplate capacity for each of the Projects is XXXXXXXXXX megawatts and it is intended that three wind turbines will be installed at the site of each of the Projects. The capacity of each of the Wind Turbines is now proposed to be XXXXXXXXXX megawatts; however, if units of that capacity cannot be delivered in time, it is proposed that units having a XXXXXXXXXX megawatt capacity will be used for each of the Wind Turbines. The capacity of the two additional wind turbines that will be installed as part of the Projects will be XXXXXXXXXX megawatts. It is anticipated that each of the Wind Turbines will be commissioned and enter into service before the end of XXXXXXXXXX.
Natural Resources Canada ("NR Can") reviewed the applications for technical opinions on the Wind Turbines (the "Applications"; NR Can file numbers XXXXXXXXXX) made by the Corporation. You have indicated that, except to the extent detailed above, the representations and information contained in the Applications remain unchanged. After considering the revised information that you have submitted, NR Can continues to be of the opinion that the planned nameplate capacity for each of the Projects is limited from an engineering or scientific perspective.
Notwithstanding the foregoing amendments to each of the Projects and provided that:
(a) the conditions set out in paragraphs (i) to (vii) on page 2 of the Opinion continue to be valid,
(b) the Projects will be undertaken as described in the Applications with the Wind Turbines being installed and used for the testing programs described therein;
(c) the facts and representations relating to these Projects, including those referred to above, remain as stated in the Applications; and
(d) subsections 1219(1) and (3) of the Regulations are amended substantially in the form contained in the Proposed Amendments;
it continues to be our opinion that each of the Wind Turbines will constitute a test wind turbine for purposes of subsection 1219(1) and (3) of the Regulations, as amended by the Proposed Amendments, at the time the respective wind energy conversion system that they form part of would, but for section 1219 of the Regulations, be property included in Class 43.1 to Schedule II of the Regulations because of subparagraph (d)(v) thereof.
The "Other Comments" noted in the Opinion continue to be applicable.
Yours truly,
for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Planning Branch
c.c. Mr. Tom Jewett
Class 43.1 Secretariat
CANMET Energy Technology Centre
Natural Resources Canada
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