I-3, r. 1 - Regulation respecting the Taxation Act

Section 399.7r1 Disposition versions

2020-04-01

399.7R1. Subject to section 399.7R2 and for the purposes of section 399.7 of the Act, Canadian renewable and conservation expense means an expense incurred by a taxpayer, and payable to a person or to a partnership with whom the taxpayer is dealing at arm’s length, in respect of the development of a project for which it is reasonable to expect that at least 50% of the capital cost of the depreciable property to be used in the project would be the capital cost of any property that is described in Class 43.1 or 43.2 in Schedule B or that would be such property but for this section, and includes such an expense incurred by the taxpayer

(a)  for the purpose of making a service connection to the project for the transmission of electricity to a purchaser of the electricity, to the extent that the expense so incurred was not incurred to acquire property of the taxpayer;

(b)  for the construction of a temporary access road to the project site;

(c)  for a right of access to the project site before the earliest time at which a property described in Class 43.1 or 43.2 in Schedule B is used in the project for the purpose of earning income;

(d)  for clearing land to the extent necessary to complete the project;

(e)  for process engineering for the project, including collection and analysis of site data, calculation of energy, mass, water, or air balances, simulation and analysis of the performance and cost of process design options, and selection of the optimum process design;

(f)  for the drilling or completion of a well for the project, other than a well that is, or can reasonably be expected to be, used for the installation of underground piping that is included in Class 43.1 in Schedule B by reason of subparagraph a of the second paragraph of that class, or in Class 43.2 in Schedule B by reason of paragraph b of that class or a well referred to in subparagraph h;

(g)  for a test wind turbine that is part of a wind farm project of the taxpayer; or

(h)  if at least 50% of the capital cost of the depreciable property to be used in respect of the project is the capital cost of property described in subparagraph viii of subparagraph a of the second paragraph of Class 43.1 in Schedule B,

i.  for the drilling of a well, or

ii.  solely for the purpose of determining the extent and quality of a geothermal resource.

For the purposes of subparagraph g of the first paragraph, a test wind turbine means a fixed location device that is a wind energy conversion system and that is a test wind turbine within the meaning of paragraph 3 of section 1219 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

For the purposes of the first paragraph, a Canadian renewable and conservation expense

(a)  includes an expense incurred by a taxpayer to acquire a fixed location device that is a wind energy conversion system only if the device is described in subparagraph g of the first paragraph; and

(b)  does not include an expense incurred by a taxpayer at any time that is in respect of a geothermal project that at that time is described in subparagraph h of the first paragraph and in respect of which the taxpayer has not satisfied the requirements, applicable in respect of the property, of all environmental laws, by-laws and regulations of Canada, a province, a municipality in Canada or a municipal or public body performing a function of government in Canada.

s. 399.7R1; O.C. 1470-2002, s. 42; O.C. 1149-2006, s. 24; O.C. 1116-2007, s. 24; O.C. 134-2009, s. 1; O.C. 390-2012, s. 33; O.C. 204-2020, s. 6.

2012-09-01

399.7R1. Subject to section 399.7R2 and for the purposes of section 399.7 of the Act, Canadian renewable and conservation expense means an expense incurred by a taxpayer, and payable to a person or to a partnership with whom the taxpayer is dealing at arm’s length, in respect of the development of a project for which it is reasonable to expect that at least 50% of the capital cost of the depreciable property to be used in the project would be the capital cost of any property that is described in Class 43.1 or 43.2 in Schedule B or that would be such property but for this section, and includes such an expense incurred by the taxpayer

(a)  for the purpose of making a service connection to the project for the transmission of electricity to a purchaser of the electricity, to the extent that the expense so incurred was not incurred to acquire property of the taxpayer;

(b)  for the construction of a temporary access road to the project site;

(c)  for a right of access to the project site before the earliest time at which a property described in Class 43.1 or 43.2 in Schedule B is used in the project for the purpose of earning income;

(d)  for clearing land to the extent necessary to complete the project;

(e)  for process engineering for the project, including collection and analysis of site data, calculation of energy, mass, water, or air balances, simulation and analysis of the performance and cost of process design options, and selection of the optimum process design;

(f)  for the drilling or completion of a well for the project, other than a well that is, or can reasonably be expected to be, used for the installation of underground piping that is included in Class 43.1 in Schedule B by reason of subparagraph a of the second paragraph of that class, or in Class 43.2 in Schedule B by reason of paragraph b of that class; or

(g)  for a test wind turbine that is part of a wind farm project of the taxpayer.

For the purposes of subparagraph g of the first paragraph, a test wind turbine means a fixed location device that is a wind energy conversion system and that is a test wind turbine within the meaning of paragraph 3 of section 1219 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

For the purposes of the first paragraph, a Canadian renewable and conservation expense includes an expense incurred by a taxpayer to acquire a fixed location device that is a wind energy conversion system only if the device is described in subparagraph g of the first paragraph.

s. 399.7R1; O.C. 1470-2002, s. 42; O.C. 1149-2006, s. 24; O.C. 1116-2007, s. 24; O.C. 134-2009, s. 1; O.C. 390-2012, s. 33.