26 June 1984 Income Tax Severed Letter 5-5502 - ["Pipeline" - Class 2, Schedule II Income Tax Act]

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.

D. Lanos (613) 993-6201

June 26, 1984

Dear Sir:

Re: "Pipeline" - Class 2, Schedule II Income Tax Act

This is in reply to your letter of December 2, 1983 and the written submission attached thereto in which you requested a technical interpretation of the meaning of the word "pipeline" as used in Class 2 of Schedule II of the Income Tax Act (the "Act").

We have given the arguments set forth in your submission extensive and careful consideration. It remains our view, in the absence of a definition of the word "pipeline" in the Act itself, that a pipeline in plain words is a "line of pipes" and as such would include pressure piping. It is also our view that the higher standards imposed by other legislation on the construction of pressure piping would not pose a sufficient reason for removing or excluding it from the meaning of pipeline for purposes of Class 2 of the Act.

We understand that the fact situation which prompted your submission involved the reclassification to Class 2 of certain lengthy pressure pipeline which was located within a refinery's gates or limits. In this regard, we are unable to restrict the meaning of pipeline to specifically exclude such pipeline found within refinery gates. Indeed it would seem that all types of pipelines are to be included in Class 2 by virtue of what appears to be an attempt to broaden that class in 1976 by the removal of the words "for gas, oil or water" which had previously modified "pipeline" as used in that class.

We regret that we are unable to give a more favourable reply. If you feel that it is inappropriate that this type of pipeline be included in Class 2, you may wish to make representations to the Department of Finance which is responsible for amendments to the law.

Yours truly,

for Director Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch

                                             Appendix "B"

Definition of "Pipeline"

Statutes of Canada:

a) the National Energy Board Act, 1959, R.S.C., c. N-6, as amended by 1980-81-82, c. 116, a. 1(5) and 1(6).

"pipeline" means a line for the transmission of gas or oil connecting a province with any other or others of the provinces, or extending beyond the limits of a province or the offshore area as defined in section 87, and includes all branches, extensions, tanks, reservoirs, storage facilities, pumps, racks, compressors, loading facilities interstation systems of communication by telephone, telegraph or radio, and real and personal property and works connected therewith;

Provincial Statutes:

Alberta

b) Pipeline Act, B.S.A., 1980, c. P-8, s. 1(s).

(a) "pipeline" means a gas line, oil line, fluids line, multiphase line, solids line, secondary line, distribution line or flow line;

                         PART I

                   APPLICATION OF ACT

2. Except as otherwise provided in this Act, this Act applies to all pipelines in Alberta other than

(a) a pipeline situated wholly within the property of a refinery, processing plant, coal processing plant, marketing plant or manufacturing plant,

(b) a pipeline for which there is in force

(i) a certificate, or

       (ii) an order exempting the pipeline from a
            certificate,

issued or made by the National Energy Board under the National Energy Board Act (Canada),

(c) that portion of a distribution system for the distribution of gas to consumers in a city, town or village that is within the boundaries of the city, town or village,

(d) pipe transmitting gas or oil for use as fuel from a tank that is situated wholly within the property of a consumer and the installations in connection with that pipe,

(e) a gas installation within the meaning of the Gas Protection Act, or

(f) a boiler, pressure vessel or pressure piping system within the meaning of the Boilers and Pressure Vessels Act.

Ontario

c) The Energy Act, R.S.O, 1960, c. 122:

   s.1. 20. "pipe line", except in Part II, means a pipe
            that carries a 'hydrocarbon;

                         PART II

                       PIPE LINES

10. In this Part, "line" or "pipe line" means a pipe line for the transmission of hydrocarbons, and includes any work appurtenant thereto and a branch line, but does not include gathering lines, flow lines or distribution lines and does not include other lines within or contiguous to an oil refinery, oil or petroleum storage depot, chemical processing plant or pipe line terminal. 1960, c . 30, s. 10.

d) An Act to Regulate the Handling and Use of Hydrocarbons, S.O. 1971, c. 44.

s.1. (k) "pipeline" means a pipe that is used for the transmission or distribution of a hydrocarbon and includes fittings, valves, controls, compressor stations, pressure regulating stations and meter stations, but does not include the pipe, fittings, valves or controls of the end user;

e) Energy Act, R.S.O. 1980, c. 139

   1. (k) "pipeline" means a pipe that is used for the
          transmission or distribution of a hydrocarbon and
          includes fittings, valves, controls, compressor
          stations, pressure regulating stations end meter
          stations, but does not include the pipe, fittings,
          valves or controls of the end user;

                                             Appendix 'C'

Refinery Pressure Piping

Provincial Statutes:

Alberta:

a) Boilers and Pressure Vessels Act, R.S.A., 1980, c. B-8.

   s.1. (n) "pressure piping system" means pipe, tubes,
             conduits, fittings, gaskets, bolting and other
             components making up a system the sole purpose
             of which is the conveyance of an expansible
             fluid under pressure and the control of the
             flow of an expansible fluid under pressure
             between 2 or more points;

b) The identical definition in a) above is found in the Boilers and Pressure Vessels Act, R.S.A., 1975, c. 4, s.1.14.

c) There are no definitions of "pipeline" or "pressure piping system" in the following Acts:

- The Boilers and Pressure Vessels Act, S.A., 1955 c. 65 (R.S.A., 1955, c. 27)

- The Boilers Act, R.S.A., 1942, c. 307

- An Act relating to the Construction of Pipelines (The Pipeline Act), R.S.A., 1942, c. 315

Ontario

d) Boilers and Pressure Vessels Act, R.S.O., 1980, c. 46

   s.1. 18. "pipe" means any pipe attached to or connected
            with a boiler, pressure vessel or plant;

        19. "plant" means a system of piping that is used
            to contain a gas, vapour or liquid under
            pressure, and includes any boiler or pressure
            vessel connected thereto;

        21. "pressure vessel" means an unfired vessel that
            may be used for containing, storing,
            distributing, transferring, distilling,
            processing or otherwise handling any gas, vapour
            or liquid under pressure, and includes any pipe,
            fitting and other equipment attached thereto or
            used in connection therewith, except that, where
            the expression is used in respect of the
            approval and registration of its design,
            "pressure vessel" means an unfired vessel that
            may be used for containing, storing,
            distributing, transferring, distilling,
            processing or otherwise handling any gas, vapour
            or liquid under pressure;