Vol. 145, No. 4 — February 16, 2011

Registration

SOR/2011-9 February 4, 2011

INCOME TAX ACT

ARCHIVED — Regulations Amending the Income Tax Regulations (Phase-out of the Accelerated Capital Cost Allowance for Oil Sands Projects)

P.C. 2011-44 February 3, 2011

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 221 (see footnote a) of the Income Tax Act (see footnote b), hereby makes the annexed Regulations Amending the Income Tax Regulations (Phase-out of the Accelerated Capital Cost Allowance for Oil Sands Projects).

REGULATIONS AMENDING THE INCOME TAX REGULATIONS (PHASE-OUT OF THE ACCELERATED CAPITAL COST ALLOWANCE FOR OIL SANDS PROJECTS)

AMENDMENTS

1. (1) Paragraph 1100(1)(a) of the Income Tax Regulations (see footnote 1) is amended by adding the following after subparagraph (xxvii):

(xxvii.1) of Class 41.1, 25 per cent,

(2) Subparagraph 1100(1)(w)(i) of the Regulations is replaced by the following:

(i) the taxpayer’s income for the year from the mine, before making any deduction under this paragraph, paragraph (x), (y), (y.1), (ya) or (ya.1), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

(3) Subparagraph 1100(1)(x)(i) of the Regulations is replaced by the following:

(i) the taxpayer’s income for the year from the mines, before making any deduction under this paragraph, paragraph (ya) or (ya.1), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

(4) Subparagraph 1100(1)(y)(i) of the Regulations is replaced by the following:

(i) the taxpayer’s income for the year from the mine, before making any deduction under this paragraph, paragraph (x), (ya) or (ya.1), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

(5) Subsection 1100(1) of the Regulations is amended by adding the following after paragraph (y):

Additional Allowances — Class 41.1

(y.1) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from a mine and for which a separate class is prescribed by subsection 1101(4e), not exceeding the amount determined by the formula

A × B

where

A is the lesser of

(i) the taxpayer’s income for the year from the mine, before making any deduction under this paragraph, paragraph (x), (y), (ya) or (ya.1), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

(ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year computed

(A) without reference to subsection (2),

(B) after making any deduction under paragraph (a) for the taxation year, and

(C) before making any deduction under this paragraph; and

B is the percentage that is the total of

(i) that proportion of 100% that the number of days in the taxation year that are before 2011 is of the number of days in the taxation year,

(ii) that proportion of 90% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year,

(iii) that proportion of 80% that the number of days in the taxation year that are in 2012 is of the number of days in the taxation year,

(iv) that proportion of 60% that the number of days in the taxation year that are in 2013 is of the number of days in the taxation year, and

(v) that proportion of 30% that the number of days in the taxation year that are in 2014 is of the number of days in the taxation year;

(6) Subsection 1100(1) of the Regulations is amended by adding the following after paragraph (ya):

Additional Allowances — Class 41.1 — Multiple Mine Properties

(ya.1) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from more than one mine and for which a separate class is prescribed by subsection 1101(4f), not exceeding the amount determined by the formula

A × B

where

A is the lesser of

(i) the taxpayer’s income for the year from the mines, before making any deduction under this paragraph, paragraph (ya), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

(ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year computed

(A) without reference to subsection (2),

(B) after making any deduction under paragraph (a) for the taxation year, and

(C) before making any deduction under this paragraph; and

B is the percentage that is the total of

(i) that proportion of 100% that the number of days in the taxation year that are before 2011 is of the number of days in the taxation year,

(ii) that proportion of 90% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year,

(iii) that proportion of 80% that the number of days in the taxation year that are in 2012 is of the number of days in the taxation year,

(iv) that proportion of 60% that the number of days in the taxation year that are in 2013 is of the number of days in the taxation year, and

(v) that proportion of 30% that the number of days in the taxation year that are in 2014 is of the number of days in the taxation year;

2. The heading before subsection 1101(4a) and subsections 1101(4a) to (4d) of the Regulations are replaced by the following:

Class 28 — Single Mine Properties

(4a) If one or more properties of a taxpayer are described in Class 28 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

(a) were acquired for the purpose of gaining or producing income from that mine;

(b) would otherwise be included in Class 28; and

(c) are not included in a separate class by reason of subsection (4b).

Class 28 — Multiple Mine Properties

(4b) If more than one property of a taxpayer is described in Class 28 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

(a) were acquired for the purpose of gaining or producing income from the particular mines; and

(b) would otherwise be included in Class 28.

Class 41 — Single Mine Properties

(4c) If one or more properties of a taxpayer are described in paragraph (a), (a.1) or (a.2) of Class 41 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

(a) were acquired for the purpose of gaining or producing income from that mine;

(b) would otherwise be included in Class 41; and

(c) are not included in a separate class by reason of subsection (4d).

Class 41 — Multiple Mine Properties

(4d) If more than one property of a taxpayer is described in paragraph (a), (a.1) or (a.2) of Class 41 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

(a) were acquired for the purpose of gaining or producing income from the particular mines; and

(b) would otherwise be included in Class 41.

Class 41.1 — Single Mine Properties

(4e) If one or more properties of a taxpayer are described in paragraph (a) of Class 41.1 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

(a) were acquired for the purpose of gaining or producing income from that mine;

(b) would otherwise be included in Class 41.1, because of paragraph (a) of that class; and

(c) are not included in a separate class by reason of subsection (4f).

Class 41.1 — Multiple Mine Properties

(4f) If more than one property of a taxpayer is described in paragraph (a) of Class 41.1 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

(a) were acquired for the purpose of gaining or producing income from the particular mines; and

(b) would otherwise be included in Class 41.1 because of paragraph (a) of that class.

3. (1) Paragraph 1102(8)(d) of the Regulations is replaced by the following:

(d) Class 41 or 41.1 in Schedule II in any other case, except where the property would otherwise be included in Class 43.1 or 43.2 in Schedule II and the taxpayer has, by a letter filed with the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected to include the property in Class 43.1 or 43.2, as the case may be.

(2) Paragraph 1102(9)(d) of the Regulations is replaced by the following:

(d) Class 41 or 41.1 in Schedule II in any other case, except where the property would otherwise be included in Class 43.1 or 43.2 in Schedule II and the taxpayer has, by a letter filed with the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected to include the property in Class 43.1 or 43.2, as the case may be.

(3) The portion of subsection 1102(14) of the Regulations before paragraph (a) is replaced by the following:

(14) Subject to subsection (14.11), for the purposes of this Part and Schedule II, if a property is acquired by a taxpayer

(4) Subsection 1102(14.1) of the Regulations is replaced by the following:

(14.1) For the purposes of this Part and Schedule II, if a taxpayer has acquired, after May 25, 1976, property of a class in Schedule II (in this subsection referred to as the “present class”), that had been previously owned before May 26, 1976 by the taxpayer or by a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired, and at the time the property was previously so owned it was a property of a different class (other than Class 28 or 41) in Schedule II (in this subsection referred to as the “former class”), the property is deemed to be property of the former class and not to be property of the present class.

(14.11) If, after March 18, 2007, a taxpayer acquires an oil sands property in circumstances to which subsection (14) applies and the property was depreciable property that was included in Class 41, because of paragraph (a), (a.1) or (a.2) of that Class, by the person or partnership from whom the taxpayer acquired the property, the following rules apply:

(a) there may be included in Class 41 of the taxpayer only that portion of the property the capital cost of which portion to the taxpayer is the lesser of the undepreciated capital cost of Class 41 of that person or partnership immediately before the disposition of the property by the person or partnership and the amount, if any, by which that undepreciated capital cost is reduced as a result of that disposition; and

(b) there shall be included in Class 41.1 of the taxpayer that portion, if any, of the property that is not the portion included in Class 41 of the taxpayer under paragraph (a).

4. (1) Paragraph (b) of the definition “specified temporary access road” in subsection 1104(2) of the Regulations is replaced by the following:

(b) a temporary access road the cost of which would, if the definition “Canadian exploration expense” in subsection 66.1(6) of the Act were read without reference to paragraphs (k.1) and (l) of that definition, be a Canadian exploration expense because of paragraph (f) or (g) of that definition; (route d’accès temporaire déterminée)

(2) Subsection 1104(2) of the Regulations is amended by adding the following in alphabetical order:

“bitumen development phase” of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to extract and initially process tar sands to produce bitumen or a similar product; (phase de mise en valeur du bitume)

“completion” of a specified development phase of a taxpayer’s oil sands project means the first attainment of a level of average output, attributable to the specified development phase and measured over a sixty day period, equal to at least 60% of the planned level of average daily output (as determined in paragraph (b) of the definition “specified development phase”) in respect of that phase; (achèvement)

“designated asset” in respect of a development phase of a taxpayer’s oil sands project, means a property that is a building, a structure, machinery or equipment and is, or is an integral and substantial part of,

(a) in the case of a bitumen development phase,

(i) a crusher,

(ii) a froth treatment plant,

(iii) a primary separation unit,

(iv) a steam generation plant,

(v) a cogeneration plant, or

(vi) a water treatment plant, or

(b) in the case of an upgrading development phase,

(i) a gasifier unit,

(ii) a vacuum distillation unit,

(iii) a hydrocracker unit,

(iv) a hydrotreater unit,

(v) a hydroprocessor unit, or

(vi) a coker; (bien désigné)

“development phase” of a taxpayer’s oil sands project means the acquisition, construction, fabrication or installation of a group of assets, by or on behalf of the taxpayer, that may reasonably be considered to constitute a discrete expansion in the capacity of the oil sands project when complete (including, for greater certainty, the initiation of a new oil sands project); (phase de mise en valeur)

“oil sands project” of a taxpayer means an undertaking by the taxpayer for the extraction of tar sands from a mineral resource owned by the taxpayer, which undertaking may include the processing of the tar sands to a stage that is not beyond the crude oil stage or its equivalent; (projet de sables bitumineux)

“oil sands property” of a taxpayer means property acquired by the taxpayer for the purpose of earning income from an oil sands project of the taxpayer; (bien de sables bitumineux)

“preliminary work activity” means activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of designated assets in respect of the taxpayer’s oil sands project including, without limiting the generality of the foregoing, the following activities:

(a) obtaining permits or regulatory approvals,

(b) performing design or engineering work,

(c) conducting feasibility studies,

(d) conducting environmental assessments,

(e) clearing or excavating land,

(f) building roads, and

(g) entering into contracts; (travaux préliminaires)

“specified development phase” of a taxpayer’s oil sands project means a bitumen development phase or an upgrading development phase of the oil sands project which can reasonably be expected to result in a planned level of average daily output (where that output is bitumen or a similar product in the case of a bitumen development phase, or synthetic crude oil or a similar product in the case of an upgrading development phase), and in respect of which phase,

(a) not including any preliminary work activity, one or more designated assets was, before March 19, 2007,

(i) acquired by the taxpayer, or

(ii) in the process of being constructed, fabricated or installed, by or on behalf of the taxpayer, and

(b) the planned level of average daily output is the lesser of,

(i) the level that was the demonstrated intention of the taxpayer as of March 19, 2007 to produce from the specified development phase, and

(ii) the maximum level of output associated with the design capacity, as of March 19, 2007, of the designated asset referred to in paragraph (a); (phase de mise en valeur déterminée)

“specified oil sands property” of a taxpayer means oil sands property, acquired by the taxpayer before 2012, the taxpayer’s use of which is reasonably required

(a) for a specified development phase of an oil sands project of the taxpayer to reach completion; or

(b) as part of a bitumen development phase of an oil sands project of the taxpayer,

(i) to the extent that the output from the bitumen development phase is required for an upgrading development phase that is a specified development phase of the oil sands project to reach completion, and it is reasonable to conclude that all or substantially all of the output from the bitumen development phase will be so used; and

(ii) where it was the demonstrated intention of the taxpayer as of March 19, 2007 to produce, from a mineral resource owned by the taxpayer, the bitumen feedstock required for the upgrading development phase to reach completion; (bien de sables bitumineux déterminé)

“upgrading development phase” of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to process bitumen or a similar feedstock (all or substantially all of which is from a mineral resource owned by the taxpayer) to the crude oil stage or its equivalent.(phase de valorisation)

(3) The portion of subsection 1104(5) of the Regulations before paragraph (a) is replaced by the following:

(5) For the purposes of paragraphs 1100(1)(w) to (ya.1), subsections 1101(4a) to (4f) and Classes 10, 28, 41 and 41.1 of Schedule II, a taxpayer’s “income from a mine”, or any expression referring to a taxpayer’s income from a mine, includes income reasonably attributable to

(4) The portion of subsection 1104(5.1) of the Regulations before paragraph (a) is replaced by the following:

(5.1) For the purposes of Classes 41 and 41.1 of Schedule II, a taxpayer’s “gross revenue from a mine” includes

(5) The portion of subsection 1104(7) of the Regulations before paragraph (a) is replaced by the following:

(7) For the purposes of paragraphs 1100(1)(w) to (ya.1), subsections 1101(4a) to (4f) and 1102(8) and (9), section 1107 and Classes 12, 28, 41 and 41.1 of Schedule II,

(6) Subsection 1104(8.1) of the Regulations is replaced by the following:

(8.1) For greater certainty, for the purposes of paragraphs (c) and (e) of Class 28 and paragraph (a) of Class 41 and Class 41.1 in Schedule II, production means production in reasonable commercial quantities.

5. (1) Paragraph 4600(1)(b) of the Regulations is replaced by the following:

(b) that is included or would, but for Classes 28, 41 or 41.1 in Schedule II, be included in paragraph (g) of Class 10 in Schedule II.

(2) Paragraph (j) of subsection 4600(2) of the Regulations is replaced by the following:

(j) a property included in Class 28, in paragraph (a), (a.1), (a.2) or (a.3) of Class 41 or in Class 41.1 in Schedule II that would, but for Class 28, 41 or 41.1, as the case may be, be included in paragraph (k) or (r) of Class 10 of Schedule II;

6. The portion of Class 10 of Schedule II to the Regulations that is after paragraph ( f.2 ) and before paragraph (g) is replaced by the following:

and property (other than property included in Class 41 or 41.1 or property included in Class 43 that is described in paragraph (b) of that Class) that would otherwise be included in another Class in this Schedule, that is

7. The portion of Class 41 of Schedule II to the Regulations before paragraph (a) is replaced by the following:

Class 41

Property (other than property included in Class 41.1)

8. Schedule II to the Regulations is amended by adding the following after Class 41:

Class 41.1

Oil sands property (other than specified oil sands property) that

(a) is acquired by a taxpayer after March 18, 2007 and before 2016 and that if acquired before March 19, 2007, would be included in paragraphs (a), (a.1) or (a.2) of Class 41, or

(b) is acquired by a taxpayer after 2015 and that if acquired before March 19, 2007 would be included in Class 41.

APPLICATION

9. (1) Sections 1 and 2 apply to taxation years that end after March 18, 2007.

(2) Sections 3 and 5 to 8 apply to property acquired after March 18, 2007, except that in respect of property acquired after March 18, 2007 and before May 3, 2010, the expression “for the taxation year in which the property was acquired” in paragraphs 1102(8)( d ) and (9)( d ) of the Regulations, as enacted by subsections 3(1) and (2), shall be read as “for the taxation year that includes May 3, 2010.”

(3) Subsection 4(1) applies after March 5, 1996.

(4) Subsections 4(2) to (6) apply after March 18, 2007.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The capital cost allowance (CCA) provisions in the Income Tax Regulations (the Regulations) allow businesses to deduct the cost of capital assets for income tax purposes at a rate which generally results in the cost being deducted over the period during which the asset contributes to business earnings — the asset’s useful life. The accelerated CCA provisions for oil sands projects (initially introduced in 1972), which allow the cost of eligible capital assets to be written off more quickly, are an exception to this principle.

Accelerated CCA provides a financial benefit to oil sands projects by effectively deferring taxation of project earnings until the cost of the eligible assets has been recovered out of project earnings. This financial support was provided to improve cash flows in response to uncertainties associated with the use of emerging technologies that made early oil sands projects particularly risky, to allow Canada to compete with other jurisdictions in securing large investments needed to develop the then-economically marginal oil sands sector, and to promote the development of a strategic resource.

However, over time, important technological developments and changing economic conditions have led to major investments that have successfully demonstrated the economic viability and significant size of Canada’s oil sands resources. The sector has expanded to a point where the majority of Canada’s oil production now comes from oil sands. At the time of Budget 2007, with oil sands growth increasingly being limited by physical factors like availability of labour and materials, the impact of accelerated CCA on the level of activity was increasingly marginal, in spite of the increasing fiscal cost of the incentive. With annual capital investment well over $10 billion and additional investment in the order of $100 billion expected over the coming decade, the Government concluded that the sector was “healthy and vibrant” and that targeted financial support through accelerated CCA was no longer necessary.

Complete text of the budget announcement is available online:

www.budget.gc.ca/2007/plan/bpa5a-eng.html#business (in English)

www.budget.gc.ca/2007/plan/bpa5a-fra.html#visant (en français)

Objectives

Implementation of these amendments to the Regulations will improve fairness and neutrality in the taxation of oil sands relative to other sectors — both within and outside the oil and gas industry — so that the investment allocated based on market signals rather than tax treatment.

Description

The Regulations are amended so that the accelerated CCA will continue to be available in full for assets acquired before March 19, 2007 (the 2007 budget date), and assets acquired before 2012 that are part of a project phase on which major construction began before March 19, 2007. For other oil sands assets, the additional accelerated allowance will be phased out as follows: 90% in 2011; 80% in 2012; 60% in 2013; and 30% in 2014. No accelerated CCA will be allowed after 2014 and only the regular 25% CCA rate will apply.

The Regulations are also amended to include new definitions which are necessary to determine if an oil sands property qualifies for accelerated CCA, e.g. property acquired to complete an oil sands project phase on which major construction began before March 19, 2007. These new definitions apply after March 18, 2007. Consequential amendments have also been made to other provisions of the Regulations, to ensure consistency with the existing legislative wording and for harmonizing the changes with existing regulatory rules, e.g. rules governing the order of deductions in case a taxpayer owns mining properties eligible for inclusion in different CCA separate classes.

In addition, these amendments to the Regulations correct a technical deficiency in the wording of the definition “specified temporary access road” by adding a reference to paragraph (k.1) of the definition of “Canadian exploration expense” (CEE) in the Income Tax Act. This amendment ensures that the cost of a specified temporary access road is treated as a CEE where it meets the requirements of that provision, even if it would otherwise be included in a CCA class. This amendment applies after March 6, 1996. It confirms the administrative position of the Canada Revenue Agency and is cost-neutral.

Detailed explanatory notes for all of the above-mentioned amendments are available online at the Department of Finance website at the following locations:

www.fin.gc.ca/n10/10-041-eng.asp (in English)

www.fin.gc.ca/n10/10-041-fra.asp (en français)

Regulatory and non-regulatory options considered

No non-regulatory options were considered. Under the present legislative framework, accelerated CCA is provided for oil sands projects through the CCA regime of the Regulations. The only way to phase-out this accelerated CCA regime projects is by way of these amendments to the relevant provisions of the Regulations.

Benefits and costs

The phase-out will gradually reduce, and eventually eliminate, the current cost to the Government in foregone tax revenue associated with providing accelerated CCA for oil sands. This cost can vary considerably from year to year based on project and industry factors. It was forecast, at the time of Budget 2007, to be on average $300 million annually on a nominal cash flow basis for the period 2007 to 2011. This revenue cost will decline as the phase-out proceeds over the 2011–2015 period as a result of these amendments, resulting in higher revenues in the form of corporate income taxes, and will eventually be eliminated.

Meanwhile, once a non-neutrality in the tax system like accelerated CCA ceases to serve its original policy intent, it can reduce overall economic activity by influencing market decisions so that the investment is not allocated to its most productive use. Therefore, in addition to eliminating the cost to Government of providing accelerated CCA, the phase-out will also improve fairness and neutrality in the taxation of oil sands relative to other sectors — both within and outside the oil and gas industry — so that the investment is allocated based on market signals rather than tax treatment.

A Strategic Environmental Assessment in respect of these amendments was conducted before the Budget 2007 announcement for this proposal. It concluded that this proposal could have important indirect environmental impacts in the longer term.

Oil sands development is associated with a variety of environmental impacts — water and natural gas usage, release of air and water contaminants, greenhouse gas emissions, disturbance of natural habitats and wildlife. Projects are, however, subject to applicable federal and provincial environmental regulations, including, in most cases, project-specific environmental assessment procedures, which are designed to help understand, limit and mitigate environmental impacts. To the extent that the accelerated CCA for oil sands projects induces incremental oil sands development that is associated with additional environmental impacts, phasing out the incentive could reduce such incremental impacts. It will help ensure that going forward investment decisions are based on market factors, subject to applicable environmental regulations.

In terms of administrative costs, over the long term, elimination of the accelerated CCA will reduce both compliance costs for oil sands producers and administrative costs for the Canada Revenue Agency associated with applying the various conditions applicable to the accelerated CCA provisions. Such savings, however, are expected to be modest relative to the significant fiscal savings from implementing the phase-out.

Rationale

The oil sands sector has reached a state of growth development such that targeted financial support through accelerated CCA is no longer required.

The announcement of the phase-out of the accelerated CCA for oil sands projects in Budget 2007 followed submissions made by various organizations to the House of Commons Standing Committees on Finance and on Natural Resources. It was also noted in the Government’s response to the Fourth Report of the Standing Committee on Natural Resources: The Oil Sands: Towards Sustainable Development, which recommended the elimination of accelerated CCA (Recommendation 17). Internationally, the phase-out has been cited by Canada as an action supporting the G-20 Leaders’ commitment to rationalize and phase out inefficient fossil fuel subsidies.

The transitional regime phasing out the accelerated CCA for oil sands projects recognizes that there are long time frames involved in many oil sands projects. The amendments recognize that decisions and commitments with respect to future asset purchases were already made prior to Budget 2007 on the assumption that the accelerated CCA would be available.

Consultation

After the announcement of the phase-out in Budget 2007, written submissions were received from industry stakeholders, organizations and individuals. These submissions were considered during the formulation of these amendments and, where appropriate, the amendments take into account the concerns expressed by stakeholders. A draft of these amendments to the Regulations, along with detailed explanatory notes, was released for consultation and posted on the Department of Finance’s website on May 3, 2010 (Finance news release 2010-041). Stakeholders were invited to provide comments until July 6, 2010. No comments were received. Since the version released on May 3, 2010, no substantive changes have been made to these amendments. However, in subsection 1104(2) of the Regulations, a typographical error has been corrected in the definition “specified development phase.” The word “project” immediately before paragraph (a) in the preamble of the definition is replaced by the word “phase.”

Implementation, enforcement and service standards

The Income Tax Act provides the necessary compliance mechanisms. These mechanisms allow the Minister of National Revenue to assess and reassess tax payable, conduct audits and verify relevant records and documents.

Performance measurement and evaluation

The Department of Finance conducts ongoing reviews of the tax policy aspects of the income tax laws including the use of accelerated CCA. The interpretation of tax legislation by the judiciary, tax professionals and the Canada Revenue Agency is also monitored by the Department of Finance and, if needed, appropriate amendments to the relevant legislation are proposed.

Contact

Gurinderpal Grewal
Senior Advisor
Tax Legislation Division
Department of Finance
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-992-1862

Footnote a
S.C. 2007, c. 35, s. 62

Footnote b
R.S., c. 1 (5th Supp.)

Footnote 1
C.R.C., c. 945