28 September 2005 External T.I. 2005-0149411E5 - test wind turbines

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 changes to the placement of XXXXXXXXXX test wind turbines will affect the opinion provided in 2004-010308.

Position: no

Reasons: requirements of the Regulation continue to be met

2005-014941
XXXXXXXXXX T. Harris
(613) 957-2114
September 28, 2005

Dear XXXXXXXXXX:

Re: XXXXXXXXXX Wind Farm Project

We are writing further to your electronic mail messages of August 29 and 30, 2005, in which you described certain changes relating to the proposed wind farm project that was the subject of our letter of May 2, 2005 (our file 2004-010308, the "Opinion"). In particular, the Opinion concerned the eligibility of each of XXXXXXXXXX planned wind turbines to be installed by XXXXXXXXXX (the "Corporation") as a "test wind turbine" within the meaning of the amendments to subsection 1219(3) of the Income Tax Regulations (the "Regulations"), that were recently promulgated by SOR/2005-266 dated August 31, 2005 and published in Part II of the Canada Gazette, Vol. 139, No. 19 on September 21, 2005.

The Corporation continues to pursue the development of the wind farm project involving wind turbines to be located in XXXXXXXXXX (the "Project"). The Corporation will own all of the wind turbines relating to the Project and will also develop and operate the Project. At the termination of the lease, the Corporation will be required to remove the wind turbines from the site and return the land to its natural state.

As a result of refinements to the Project, it is proposed that one of the XXXXXXXXXX wind turbines referred to above (collectively referred to herein as the "Test Turbines") will now be located at each of the following sites:

XXXXXXXXXX.

The capacity of each of the XXXXXXXXXX Test Turbines to be installed as described above will continue to be XXXXXXXXXX MW as described in the Opinion. Similarly, the planned nameplate capacity for the Project remains at XXXXXXXXXX MW as described in the Opinion. It is anticipated that each of the Test Turbines will be commissioned and enter into service in XXXXXXXXXX.

Natural Resources Canada ("NRCan") has reviewed the applications for technical opinions on the XXXXXXXXXX Test Turbines (the "Applications"; NRCan file numbers XXXXXXXXXX), as well as the proposed revisions to the Project described herein.

You have indicated that, except to the extent detailed above, the representations and information contained in the Applications remain unchanged from those described in the Opinion.

Notwithstanding the foregoing amendments to the Project 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 program described therein;

(c) the facts and representations relating to the Project, including those referred to above, remain as stated in the Applications; and

(d) the expenses to be incurred by the Corporation relating to the acquisition of the Wind Turbines will be payable to a person or partnership with whom the Corporation is dealing at arm's length;

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 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. Micheline Brown

Engineering, Research and Technical Team
Industrial Programs Division
Office of Energy Efficiency
Natural Resources Canada
580 Booth St., 18th Floor
Ottawa ON K1A 0E4