| Mr Wayne Wouters | |
| Director General | |
| Economic and Financial Analysis Branch | |
| Energy Mines and Resources Canada | File No. 7-4743 |
| 17th Floor | G.R. White |
| 580 Booth Street | (613) 957-8585 |
| Ottawa, Ontario | |
| K1A 0E4 |
March 19, 1990
Dear Mr. Wouters
Re: 24(1) Classification of Pipeline
We are writing to request your opinion on the classification for income tax purposes 24(1)
Pursuant to Class 2(b) of Schedule II of the Income Tax Regulations, pipelines other that gas or oil well equipment, are eligible for capital cost allowance at a rate of 6% unless, in the case of a pipeline for oil or natural gas, the Minister of National Revenue in consultation with the Minister of Energy, Mines and Resources, is or has been satisfied that the main source of supply for the pipeline is or was likely to be exhausted within 15 years from the date on which operation of the pipeline commenced, in which case the pipeline would qualify for capital cost allowance at 20% as a class 8 property.
Attached is a copy of an analysis by a reservoir engineer estimating 24(1)
After reviewing the attached information, we would appreciate your opinion on whether the main source of supply for this pipeline is likely to be exhausted within 15 years from the date on which operation of the pipeline commenced.
Yours truly,
Director GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch