| Mr. Wayne Wouters | File No. 5-9458 |
| Director General | G.R. White |
| Economic and Financial Analysis Branch | (613) 957-8585 |
| Energy Sector | |
| Energy Mines and Resources Canada | |
| 17th floor | |
| 580 Booth Street | |
| Ottawa, OntarioK1A 0E4 |
Attention: Mr. Mark Dallaire
February 19, 1990
Dear Sir,
Re: 24(1) Classification of Pipelines
We are writing further to your telephone conversation with Mr. John Chan of this Directorate on February 7, 1990 and your letter to us dated October 17, 1989.
19(1) has informed us that the has sent you the necessary submissions to enable you to reevaluate the reserves of the 24(1) and has requested that we refer the question back to you for review.
The issue is the same. Class 2(b) of Schedule II of the Income Tax Regulations states that pipelines are eligible for a year capital cost allowance of 6% "unless in the case of a pipeline for oil or natural gas, the Minister in consultation withe 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 the operation of the pipeline commenced," in which case the pipeline would be eligible for a yearly capital cost allowance of 20% as a Class 8 property.
After reviewing the new information we would appreciate your opinion on whether 24(1)
Yours truly,
Director GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch