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 changes to the transactions described in our file 2005-014942 would alter our opinion regarding the ability of each of the 2 proposed exploratory wind turbines to qualify as test wind turbines under Reg. 1219(3).
Position: No
Reasons: requirements of Reg. 1219(3) continue to be met and a favourable opinion confirming this was provided by Natural Resources Canada on November 30, 2005
2005-016139
XXXXXXXXXX Catherine Bowen
(613) 957-8284
December 2, 2005
Dear XXXXXXXXXX:
Re: XXXXXXXXXX Wind Project
We are writing further to your electronic mail message of November 29, 2005 and attached letter thereto dated November 23, in which you described certain changes relating to the proposed XXXXXXXXXX wind farm project that was the subject of our letter of September 22, 2005 (our file 2005-014942, the "Opinion"). In particular, the Opinion concerned the eligibility of each of XXXXXXXXXX planned wind turbines to be installed by XXXXXXXXXX. as a "test wind turbine" within the meaning of subsection 1219(3) of the Income Tax Regulations (the "Regulations").
The changes you outlined are as follows:
1) The name of the company has been changed from XXXXXXXXXX. to XXXXXXXXXX. (the "Corporation").
2) You intend to substitute a different brand of wind turbine for XXXXXXXXXX turbines originally scheduled to be installed. Its replacement is a XXXXXXXXXX wind turbine having a capacity of XXXXXXXXXX kW. The cost of this machine is approximately $XXXXXXXXXX and it will be located at the XXXXXXXXXX site previously identified for one of the XXXXXXXXXX machines. The XXXXXXXXXX machine is expected to be installed in XXXXXXXXXX and the XXXXXXXXXX wind turbine is expected to be installed at the XXXXXXXXXX location previously identified in XXXXXXXXXX.
3) The above change will increase the installed capacity of the XXXXXXXXXX turbines (collectively referred to herein as the "Test Turbines") to XXXXXXXXXX MW from the XXXXXXXXXX MW as set out in the original development plan.
4) The planned nameplate capacity for the Project will be increased accordingly and will be approximately XXXXXXXXXX MW.
You confirmed that all other aspects of the XXXXXXXXXX wind project remain as previously indicated. As noted in the Opinion, the Corporation continues to pursue the development of the wind farm project involving wind turbines to be located near XXXXXXXXXX (the "Project"). It will own all the wind turbines relating to the Project and will also develop and oversee the management and operation of the Project.
Natural Resources Canada ("NRCan") has reviewed the application for a technical opinion on the Test Turbines (the "Application"; NRCan file number 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 Application remain unchanged from those described in the Opinion.
Notwithstanding the foregoing changes to the Project and provided that:
(a) the conditions set out in paragraphs (i) to (viii) on pages 2 and 3 of the Opinion continue to be valid;
(b) the Project will be undertaken as described in the Application with the Test Turbines being installed and used for the testing program described therein; and
(c) the facts and representations relating to the Project, other than those changes indicated above, remain as stated in the Application
it continues to be our opinion that each of the Test 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
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