| File #: 7-922562 | |
| Prepared by: Bruce Rankin |
Date: September 2, 1992
REVENUE CANADA FORESTRY TAX CONFERENCE
PRESENTATION BY RULINGS
FORESTRY POLLUTION CONTROL EQUIPMENT
During the last twelve months we have observed a marked increase in the number of queries concerning the qualifications necessary in order for equipment to qualify for the accelerated capital cost allowance permitted by Class 24 applicable to water pollution and Class 27 applicable to air pollution.
As environmental concerns are taking an increasingly visible profile, it is timely to review the complex requirements applicable to the two pollution control CCA classes. As a result of the requirements, the applicability of Class 24 and Class 27 is quite narrow. There also appears to be a commonly held misconception among taxpayers and their representatives that once a certificate is issued by the Minister of Environment the property is eligible for inclusion in the applicable class. Thus, there is some pressure for equipment to be permitted to be included in one of the two classes in order for the owner to have access to accelerated CCA claims for expenditures related to pollution equipment.
Our review of the conditions that must be met before the property is eligible for inclusion in Class 24 or 27 confirm that all requirements are questions of the facts and circumstances that are relevant to the particular equipment. As such, we feel that the auditor having access to these facts is in the best position to evaluate the merit of the claim.
The qualifications for Class 24 and 27 are summarized in the two attached schedules. We note that the specific requirements for both classes relate not only to the primary use of the equipment but also test certain characteristics of the property, as well as its ownership and the ownership of the site at which the equipment is used.
In reviewing the class qualifications we note that the certificate issued by the Minister of Environment satisfies only one of the requirements. The certificate does not mean that all of the necessary qualifications have been met.