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 proposed changes to the location of the XXXXXXXXXX test wind turbines described in our letter 2006-017985 would alter our opinion regarding the ability of those turbines to qualify as test wind turbines under Reg. 1219(3).
Position: No.
Reasons: Requirements of Reg. 1219(3) will be met and a favourable opinion confirming that the spacing requirement will continue to be met was provided in an electronic message from NRCan on Oct. 26, 2006.
2006-021217
XXXXXXXXXX Catherine Bowen
(613) 957-8284
November 10, 2006
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
We are writing in response to the electronic message sent by XXXXXXXXXX to Mirko Maksimcev of Natural Resources Canada on October 24, 2006 indicating the revised coordinates for XXXXXXXXXX wind turbines relating to the proposed XXXXXXXXXX wind farm project that was the subject of our letter of May 16, 2006 (our file 2006-017985, the "Opinion Letter"). In particular, the Opinion Letter 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 subsection 1219(3) of the Income Tax Regulations (the "Regulations").
As noted in the Opinion Letter, the Corporation continues to pursue the development of the wind farm project involving wind turbines to be located in the vicinity of the XXXXXXXXXX (the "Project"). The revised location for each of the XXXXXXXXXX wind turbines referred to above (collectively referred to herein as the "Test Turbines") will be:
Turbine Name Description of land and coordinates of installation site
XXXXXXXXXX
In a telephone conversation of November 9, 2006 (XXXXXXXXXX/Bowen), XXXXXXXXXX indicated that, except to the extent detailed above, the representations and information contained in the Application remain unchanged from those described in the Opinion Letter.
NRCan's Review
Natural Resources Canada ("NRCan") had previously reviewed the application for a technical opinion on the Test Turbines (the "Application"; NRCan file numbers XXXXXXXXXX) and has recently reviewed the proposed revised locations described herein for the Test Turbines of the Project.
Our 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 Letter 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 and the Opinion Letter
it continues to be our opinion that each of the Test Turbines will constitute a test wind turbine for purposes of subsections 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 either subparagraph (d)(v) of Class 43.1 or paragraph (b) of Class 43.2 of Schedule II to the Regulations. In other words, the cost of each Test Turbine will not qualify as a "Canadian renewable and conservation expense" ("CRCE"), as defined in subsection 66.1(6) of the Income Tax Act (the "Act"), until such time as it is commissioned and enters into service.
The "Our Comments" noted in the Opinion Letter continue to be applicable.
Yours truly,
for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
c.c. Mirko Maksimcev
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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