On February 19, 2015, the Department of Finance
released a proposal to allow accelerated CCA treatment for
certain property acquired for use in facilities that liquefy
natural gas to supply international markets, domestic markets or to
store in periods of low demand and then regasify it in periods of
Equipment and structures used for natural gas liquefaction are
generally included in Class 47 (8 per cent declining
balance). The accelerated CCA will increase the rate to 30
per cent (on a declining balance basis) where the property is used
in Canada in connection with natural gas liquefaction. Although the
additional allowance represents a significant increase, it is not
as generous as the original allowance provided to oil sands
The additional allowance will be allowed to be claimed against
income of the taxpayer attributable to the liquefaction of natural
gas at the facility. This includes income from selling
natural gas that was liquefied by the taxpayer if the taxpayer
owned the natural gas when it entered the facility, selling
by-products from the liquefaction process and providing
liquefaction services in respect of natural gas owned by a third
party. Where a taxpayer is engaged in an integrated activity
there are special rules for determining the amount of income
attributable to the liquefaction activities. These attribution
rules differ from those introduced by British Columbia in the
Liquefied Natural Gas Income Tax Act.
Property eligible for the accelerated CCA treatment includes
property acquired after February 19, 2015 and before 2025 where the
property is part of the facility that liquefies the natural gas,
including controls, cooling equipment, compressors, pumps, storage
tanks, and ancillary equipment, pipelines used exclusively to
transport liquefied natural gas from the facility, and related
structures. Equipment used exclusively for regasification,
natural gas pipelines and electrical generation equipment will not
be eligible for the additional CCA. Non-residential buildings
at a facility that liquefies natural gas are currently eligible for
a CCA rate of 6 per cent (on a declining balance basis). An
additional 4 per cent allowance will bring the CCA rate for these
buildings to 10 per cent.
The half-year and available for use rules will apply to any
property acquired in these circumstances.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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