13 July 1992 Internal T.I. 9119437 F - CCA Classification - Refinging Equipment

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.

July 13, 1992

Attention:  Bob Neville

7-911943

Capital Cost Allowance Classification

Crude Oil Refinery Assets

This is in reply to your correspondence dated July 11, 1991 wherein you requested confirmation that positions relied upon for classifying various oil refinery assets for CCA purposes reflect current policies applied by the Rulings Directorate. We apologize for the delay in our response.

We have reviewed Schedule 1 Capital Cost Allowance Classification Crude Oil Refinery Assets Acquired Prior to 1988. The schedule accurately reflects current policy for the CCA classification of assets acquired before 1988.

We have also reviewed Schedule 2 Capital Cost Allowance Classification Crude Oil Refinery Assets Acquired After 1987. While the schedule substantially reflects current policy, we would like to comment on two matters affecting the treatment of certain pipeline related equipment and linefill.

Pipeline equipment and linefill were both affected by December 23, 1991 Department of Finance Release 91-142. The announcement provided a draft regulation to add a definition for pipeline in Regulation 1104(2) and an amendment to Regulation 1102(1) to clarify that linefill is not a depreciable property. These revisions should be reflected in the Schedule 2 and are applicable with respect to property acquired after December 23, 1991 other than property acquired before 1993, pursuant to a written agreement entered into before December 24, 1991 or property under construction on December 23, 1991.

The second matter relates to the application of the grandfathering provision. Please note that in response to a question from   24(1)   , we have taken the position that a pipeline consists of a large number of separate assets. Accordingly, each individual component of the pipeline must qualify for grandfathered relief. This position was intended to prevent the application of the grandfathering provision to a pipeline as if it were a single asset. For your information a photocopy of our response is attached.

If you have any questions or would like to discuss our comments further, please feel free to contact the rulings officer.

A/DirectorManufacturing Industries, Partnershipsand Trusts DivisionRulings Directorate