The federal government announced on February 19, 2015 that
accelerated capital cost allowance (CCA) treatment would apply to
certain property used in liquefaction facilities for the domestic
and export liquefied natural gas (LNG) markets and for LNG storage.
The new measure signals the federal government's support for
Canada's emerging LNG industry, and follows a concerted
lobbying effort by LNG project proponents and industry
A copy of the federal Department of Finance's press release
announcing the change can be accessed here; a more detailed discussion by the
Department of Finance can be obtained here; and a copy of the related draft
regulations can be found here.
LNG capital assets are generally included in Class 47, with a
CCA rate of 8%. Under the new measures, an additional deduction
will result in a CCA rate of 30% for qualifying assets related to
natural gas liquefaction that were acquired after February 19, 2015
and before 2025. Non-residential buildings that are part of a
facility for liquefaction of natural gas, and that are acquired
between these dates, will enjoy a 10% CCA rate instead of the
current 6% CCA rate.
LNG project participants will now enjoy increased deductions for
many kinds of equipment used in connection with liquefaction of
natural gas, including controls, cooling equipment, compressors,
pumps, storage tanks and pipelines used exclusively to transport
natural gas within a liquefaction facility or to move LNG (as
opposed to pipelines used to move natural gas from the gas
extraction sites to LNG facilities). However, the additional
deductions will not apply to: (i) equipment used exclusively for
regasification; (ii) property acquired to produce oxygen or
nitrogen; (iii) a breakwater, dock, jetty, wharf or similar
structure; (iv) electrical generating equipment; or (v) the
acquisition of used equipment or buildings.
The additional allowances for a liquefaction facility can be
claimed only against income attributable to liquefaction of natural
gas at that facility.
While the measures are to apply from February 19, 2015,
interested parties are invited to provide comments to the
Department of Finance by March 27, 2015.
As these new measures will allow companies that invest in new
LNG facilities to recover their investment more quickly, the
government hopes that the measures will jump-start some of the LNG
projects that are currently in the works.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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