Under the Feed-in Tariff and microFIT programs (the “FIT/micro-FIT Programs”) administered by the Ontario Power Authority (the “OPA”), a participant contracts with the OPA to supply the electricity generated from approved renewable energy project to the provincial electricity distribution system at a charge for each kWh of electricity generated regardless of whether electricity is subsequently consumed by the participant. Under the Net Metering Program, a participant used such property to generate electricity primarily for its own use, and was billed only for the difference between the value of the electricity consumed by it and the value of the electricity supplied to the provincial electrical distribution system.
After noting the exception from the specified energy property rules in Reg. 1100(24) et seq. in Reg. 1100(25) for “property that is acquired to be used by the owner primarily (i.e., more than 50%) for the purpose of gaining or producing income from either: (i) a business of the owner carried on in Canada (not including the business of selling the energy generated by the particular property); or (ii) another property held in Canada by the owner of the property,” CRA stated:
Generally, the specified energy property rules would apply to a participant in a FIT/microFIT Program or a Net Metering Program that is otherwise eligible to claim CCA in respect of a renewable energy property unless:
(a) the participant carries on a business in Canada (other than the business of selling electricity) or earns income from another property situated in Canada and the amount of electricity consumed in carrying on that business or earning income from that other property, as applicable, exceeds 50% of the electricity generated by the renewable energy property for the taxation year;
(b) the participant is a corporation (or a partnership described in subsection 1100(26) of the Regulations) whose principal business is:
(i) manufacturing or processing; (ii) mining; or (iii) the sale, distribution, or production of energy or potential energy; or
(c) the property is leased by the participant and all the requirements of paragraph 1100(25)(b) of the Regulations are met.