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.
920411
24(1) W.P. Guglich
(613) 957-2102
Attention: 19(1)
May 20, 1992
Dear Sirs:
Re: Electrical Generating Equipment This is in reply to your letter of February 5, 1992 concerning the capital cost allowance classification of a natural gas powered turbine
You state that the natural gas powered turbine runs an electrical generator which produces electrical energy for domestic sale. The consumption of natural gas chargeable to electrical energy is greater than 7,000 British Thermal Units per kilowatt-hour of electrical energy produced.
You request our views whether the turbine would be included in Class 1 under paragraph (k) or (m), or in Class 8 under paragraph (i).
In our telephone conversation (19(1)/Guglich) you indicated that a view has been presented that although the generator and other equipment would be included in Class 1 under paragraph (k) or (m) the turbine could be considered a separate asset which is not electrical generating equipment. The rationale for this view is that the turbine is not specifically designed to run an electrical generator. The turbine is so designed that it can be used for many other purposes.
As a turbine is not described in any other Class it would be included in Class 8 under paragraph (i).
In our view all the assets used to produce the electrical energy would be considered to be "electrical generating equipment". Since the electrical energy is produced by an electrical generator which is run by a gas powered turbine both the generator and the turbine would be considered part of the electrical generating equipment. As the turbine could be included in Class 1 under paragraph (k) or (m) it could not be included in Class 8 under paragraph (i). Only tangible capital property that is not included in another class in Schedule II can be included in Class 8 under paragraph (i).
We trust our comments will be of assistance to you.
Yours truly,
E. Wheeler for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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