| 24(1) | File No. 7-4743 |
| G.R. White | |
| (613) 957-8585 |
19(1)
June 6, 1990
Dear Sirs:
Re: Classification of Pipeline for Capital Cost Allowance ("CCA") purposes
We are writing in reply to your letter dated January 31, 1990, to our Calgary District Office in which you requested determination of the classification for income tax purposes of the 24(1) gas pipeline.
Pursuant to Class 1(1) of Schedule II of the Income Tax Regulations (the Regulations), pipelines acquired after 1987 other than gas or oil well equipment, are eligible for capital cost allowance at a rate of 4% 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 a 20% rate as a Class 8 property.
The Department of Energy, Mines and Resources stated that in their opinion the main source of supply for the 24(1) gas pipeline will likely be exhausted within 15 years from the date on which operation of the pipeline commenced.
The Department concurs in the opinion of the Department of Energy, Mines and Resources. We are satisfied that the main source of supply for the pipeline is likely to be exhausted within 15 years from the date the operation of the pipeline commenced and are of the view that the pipeline would qualify for inclusion as property of Class 8 of Schedule II of the Regulations by virtue of paragraph (i) thereof and the exclusion described in Class 1(1) of the Regulations.
Yours truly,
Section ChiefResource Industries SectionBilingual Services and ResourceIndustries DivisionRulings Directorate