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 proposed changes to the Project described in our letter 2005-0152451 would alter our opinion regarding the ability of the test turbines to qualify as test wind turbines under Regulations 1219.
Position: No.
Reasons: Requirements of subsection 1219(3) will continue to be met according to an electronic message from NRCan on July 12, 2007.
XXXXXXXXXX 2007-024289
Fiona Harrison
August 7, 2007
Dear XXXXXXXXXX:
Re: XXXXXXXXXX (the "Project")
This is in reply to your letter of June 19, 2007, wherein you advised of certain changes to the proposed Project that was the subject of our letter of November 9, 2005 (our file 2005-015245) (the "Opinion"). In particular, the Opinion concerned the eligibility of each of XXXXXXXXXX planned wind turbines (the "Test 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").
The following changes to the Opinion are proposed:
1) the overall size of the Project will be reduced from XXXXXXXXXX MW (XXXXXXXXXX Test Turbines and XXXXXXXXXX infill turbines of XXXXXXXXXX MW each) to XXXXXXXXXX MW (XXXXXXXXXX Test Turbines and XXXXXXXXXX infill turbines of XXXXXXXXXX MW each);
2) the number of Test Turbines will be reduced from XXXXXXXXXX Test Turbines (total of XXXXXXXXXX MW) to XXXXXXXXXX Test Turbines (total of XXXXXXXXXX MW);
3) the location and the numbering scheme of all the Test Turbines will be changed.
One of the XXXXXXXXXX Test Turbines referred to above will be located at each of the following sites (all being in Zone XXXXXXXXXX):
XXXXXXXXXX
You have advised that you have submitted your application for initial environmental approval to the XXXXXXXXXX and are in the process of finalizing all other municipal and environmental approvals. Due to the delays in permitting, you plan to have the Test Phase operational before XXXXXXXXXX. You have further advised that the Power Purchase Agreement remains unchanged with XXXXXXXXXX, other than an extension to the dates required to deliver power and to purchase all of the energy produced by the Project for XXXXXXXXXX years.
Provided successful results are obtained from the Corporation's testing program involving the Test Turbines, the Corporation plans to complete a second phase of the Project which would involve the installation of the additional XXXXXXXXXX infill phase turbines in XXXXXXXXXX. The Corporation will own all of the wind turbines relating to the Project and will also develop and operate the Project. You confirmed that all other aspects of the Project remain as previously indicated in the Opinion.
Natural Resources Canada ("NRCan") has reviewed the application for technical opinion on the first XXXXXXXXXX Test Turbines (the "Application"; NRCan file number XXXXXXXXXX) made by the Corporation, as well the proposed changes thereto.
Notwithstanding the foregoing changes to the Project and provided that:
(a) the conditions set out in paragraphs (i) to (vii) in 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 it forms 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 of the Regulations.
The "Other Comments" noted in the Opinion continue to be applicable.
Yours truly,
for Director
Resources and Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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