A municipality may acquire an interest in a Canadian renewable energy project through an (apparently Quebec) intermunicipal management board (“IMB”), which acquires an interest in the limited partnership owning the project assets and selling the electricity generated. In order for the LP to claim accelerated capital cost allowance without being constrained by the Canadian specified energy property rules, Reg. 1100(26)(b) required that all of the members of the LP be “corporations” the principal business of which is the sale, distribution or production of electricity (or certain other enumerated activities), or other qualifying partnerships.
After noting that the (apparently Quebec) statutory provisions governing an IMB are similar to those governing a CBCA corporation, including providing that the IMB is a legal person (“personne morale”), has limited liability, except in relation to certain borrowings, has a board of directors and is governed by by-laws and resolutions – and the interests in it carry voting rights, CRA stated:
[A]n IMB created under the XXXXXXXXXX qualifies as a corporation under subsection 248(1).However, paragraph 1100(26)(b) of the Regulations requires that each member of the partnership be a corporation described in paragraph 1100(26)(a) of the Regulations – that is a corporation whose principal business throughout a taxation year is: (i) manufacturing or processing; (ii) mining operation; or (iii) the sale, distribution or production of electricity, natural gas, oil, steam, heat or any other form of energy or potential energy – or another partnership described in paragraph 1100(26)(b) of the Regulations.
… [B]ased on the limited facts provided … we cannot provide a definitive answer to this [latter] question.