A wood waste fuelled heat production system and ground source heat pump likely could qualify for inclusion in Class 43.2. CRA stated:
in general, a biomass heating system acquired by a Taxpayer could be included in Class 43.2 of Schedule II if the following conditions are satisfied:
1) The biomass heating system is fuelled only by an "eligible waste fuel" (such as wood pellets), a "fossil fuel" or a combination of those.
2) The heating system is used by the Taxpayer primarily to produce thermal energy through the consumption of an "eligible waste fuel" i.e., for example, wood pellets must be the main fuel producing the thermal energy used for eligible purposes.
3) The thermal energy produced by such biomass heating system must be used directly in an industrial process or a greenhouse, operated either by the Taxpayer or by the Taxpayer's customers.
4) The biomass heating system must be located in Canada.
5) The Taxpayer acquired the biomass heating system for use in the course of earning income from a business carried on in Canada or income from property situated in Canada.
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[T]he NRCan Guide indicates that expenses for eligible property incorporated into a ground source heat pump system that qualifies for Class 43.2 treatment (by virtue of subparagraph (d)(i) of Class 43.1), include:
- The purchase and installation of heat pumps, pumps complete with controls and regulators.
- Pressure test piping and flushing systems.
- Purchase and installation of heat exchangers and thermal storage systems.
- The purchase and installation of a network of horizontal underground collectors.
For vertical well systems with a depth of less than 10 metres
- Purchase and installation of thermal storage systems (including extraction and reinjection wells, complete with wellhead equipment, piping and controls).
For vertical well systems with a depth of more than 10 metres
- The manufacture and installation of support structures: foundations, anchors, fixing brackets, other structures.
- The purchase and installation of thermal storage systems (including extraction and reinjection wells, complete with wellhead equipment, piping and controls).