ARCHIVED - Schedules – Certain Assets Used in Petroleum and Natural Gas Activities

From: Canada Revenue Agency

Natural Gas Production, Gathering and Field Processing Systems

Class 1 (4%)
  • pipelines not included in Class 8, 41 or 49 (see ¶s 15-17)
  • pipeline appendages not included in Class 41 (e.g., a compressor on a pipeline used solely for transmitting gas to a natural gas processing plant) (see ¶s 18-24)
Class 6 (10%)
  • fencing
  • condensate storage tanks not included in Class 41 (see ¶ 7)
  • qualifying buildings having no footings or base support below ground level (see ¶ 25)
Class 8 (20%)
  • a pipeline for which the main source of supply is to be exhausted within 15 years (see ¶ 15)
Class 17 (8%)
  • roads (other than specified temporary access roads) and parking areas
Class 41 (25%)
  • Exploration or drilling equipment (see ¶ 2)

Gas or oil well equipment (see ¶s 3-4)

  • equipment and structures, including wellhead equipment and well tubing, (but excluding well casings and cementing) acquired to be used in a gas field in the production of natural gas
  • pipelines used solely for transmitting gasbeyond the primary separator to a natural gas processing plant (other than a straddle plant) for processing
  • pipelines and related pipeline appendages used to carry gas well substances from the wellhead to the primary separator

Canadian field processing (see ¶s 5 to 9)

  • Canadian field processing equipment which may include pipelines, pipeline appendages and temporary storage tanks
Class 49 (8%)

a new pipeline acquired after February 22, 2005 used for the transmission of natural gas or related hydrocarbons (see ¶s 15-17)
Proposed
a new pipeline acquired after February 25, 2008 used for the transmission of carbon dioxide [See Note at the end of ¶ 15]

Proposed : Class 7 (15%)
any pumping, compression or ancillary equipment acquired after February 25, 2008 that is related to a pipeline used for the transmission of carbon dioxide

Gas Processing Plants

Class 1 (4%)
  • pipelines not included in Class 8, 41 or 49 (see ¶s 15-17 )
  • pipeline appendages used in conjunction with the distribution of natural gas (see ¶s 22 - 24)
Class 6 (10%)
  • condensate storage tanks not included in Class 41 (see ¶ 7)
  • fencing
  • qualifying buildings having no footings or base support below ground level (see ¶ 25)

Class 7 (15%)

  • pumping, compression and any ancillary equipment related to the transmission pipeline for natural gas or related hydrocarbons acquired after February 22, 2005 (see ¶s 20-21 )
  • Proposed
    any pumping, compression or ancillary equipment acquired after February 25, 2008 that is related to a pipeline used for the transmission of carbon dioxide
Class 8 (20%)
  • assets (that are not included in another class) used in the storing and selling of finished goods, including by‑product loading facilities and sulphur storage and handling equipment
  • compressor stations used for the transmission of natural gas not included in Class 7(j) or Class 1(n) (see ¶s 20 - 24)
Class 17 (8%)
  • roads (other than specified temporary access roads) and parking areas
Class 41 (25%)
  • Canadian field processing equipment pipelines, pipeline appendages and temporary storage tanks (see ¶s 5 to 7)
Class 43 (30%)
  • straddle plants (see ¶ 8)
  • all or part of a natural gas processing plant used primarily for the recovery of ethane (see ¶ 8)
  • fractionation plants where natural gas liquids are processed and fractionated into various products (see ¶ 9)

Proposed :

  • These assets will be included in Class 29 (50% straight-line) if acquired after March 18, 2007 and before 2010.
Class 49 (8%)
  • a new pipeline acquired after February 22, 2005 used for the transmission of natural gas or related hydrocarbons (see ¶s 15 - 17)

Proposed

  • a new pipeline acquired after February 25, 2008 used for the transmission of carbon dioxide

Crude Oil Production, Gathering Systems and Field Processing

Class 1 (4%)
  • a pipeline not included in Class 8, 41 or 49 (see ¶s 15-17 ) 
Class 6 (10%)
  • oil and condensate storage tanks not included in Class 41 (see ¶ 7)
  • qualifying buildings having no footings or base support below ground level (see ¶ 25)
Class 7 (15%)
  • pumping, compression and any ancillary equipment related to the transmission pipeline for petroleum acquired after February 22, 2005 (see ¶s 20-21)

Proposed

  • any pumping, compression or ancillary equipment acquired after February 25, 2008 that is related to a pipeline used for the transmission of carbon dioxide
Class 8 (20%)
  • a pipeline for which the main source of supply is to be exhausted within 15 years (see ¶ 15)
  • pipeline appendages not included in Class 7 or 41 (see ¶s 19-21)
Class 17 (8%)
  • roads (other than specified temporary access roads) and parking areas
Class 41 (25%)
  • Exploration or drilling equipment (see ¶ 2)

Gas or oil well equipment (see ¶s 3-4)

  • equipment, structures and well tubing, other than well casing and cementing, acquired to be used in an oil field in the production of crude oil – this includes the wellhead, pump jack, production tubing, sucker rods, downhole pump, etc.
  • battery or storage tanks in the field storing the product before it is metered for sale
  • pipelines and related pipeline appendages used to carry oil well substances from the wellheads to the primary separator

Canadian field processing (see ¶s 5-7)

  • Canadian field processing equipment which may include pipelines, pipeline appendages and temporary storage tanks

Processing of heavy crude oil
Condensate storage tanks used to hold condensate that is blended with heavy crude oil in a processing activity

Class 49 (8%)
  • a new pipeline acquired after February 22, 2005 used for the transmission of petroleum (see ¶s 15 -17)

Proposed

  • a new pipeline acquired after February 25, 2008 used for the transmission of carbon dioxide

Easements & Rights of Way Relating to Pipelines and Gathering Systems

  • eligible capital expenditure (as defined in subsection 14(5))

Underground storage facilities

Class 1 (4%)
  • pipelines leading to and from the underground storage facilities (other than a pipeline included in Class 49)
  • liquefying and storage facilities (other than designated underground storage) located on a natural gas transmission line that are used to store natural gas during periods of low demand (see ¶ 24)
  • compressors (not included in Class 7(j)) used to pump natural gas under pressure into or out of an underground gas storage facility (see ¶ s 20-23)
Class 7 (15%)
  • pumping and compression equipment acquired after February 22, 2005 and used for the purpose of moving petroleum, natural gas or related hydrocarbons from a transmission line to a storage facility or to a transmission line from a storage facility (see ¶ 21)
Class 41 (25%)
  • designated underground storage cost—the cost incurred by a taxpayer of developing a well, mine or other similar underground property (such as salt caverns and non-producing gas wells) for the storage of petroleum, natural gas or other related hydrocarbons
CDE
  • payments for any right, licence or privilege to store underground petroleum, natural gas or related hydrocarbons in Canada

Roads

  • CEE or CDE
  • expenses incurred in building a temporary access road to an oil or gas well in Canada may be eligible for treatment as either CEE or CDE if the requirements of paragraph (d) of the definition of CEE in subsection 66.1(6) or subparagraph (a)(ii) of the definition of CDE in subsection 66.2(5), respectively, are met (see ¶ 29) 
  • Class 17 (8%)
  • roads (other than specified temporary access roads) and parking areas
  • costs associated with the building of roads and similar projects as provided under subsection 13(7.5) (see ¶ 27)

Explanation of Changes

Introduction

The purpose of the Explanation of Changes is to give the reasons for the revisions to an interpretation bulletin. It outlines revisions we have made as a result of changes to the law as of the date of this publication, as well as changes reflecting new or revised interpretations.

Reasons for the Revision This bulletin is being revised to reflect various amendments that have been enacted since the date of the last bulletin and before the date of this bulletin, including

  •  the introduction of paragraph (j) of Class 7, Classes 41, 43 and 49;
  •  the new definitions of Canadian field processing and bituminous sands;
  •  the treatment of a bituminous sands project as a mine; and
  •  amendments to the definition of CEE and CDE to exclude depreciable property.

Legislative and Other Changes

Since the scope of the bulletin has been expanded to include assets used in natural gas processing plants, bituminous sands projects, as well as a discussion of various types of pipelines and pipeline appendages used in P and NG activities, the title of the bulletin has been revised accordingly.

New ¶s 1 and 2 indicate the types of equipment used in P and NG activities that are included in Class 41.

¶s 3-4 (portions of former ¶s 4-7) list some of the assets that are included in gas or oil well equipment.

New ¶s 5-9 explain the types of activities that qualify as “Canadian field processing”, as well as the CCA classification of property used in those activities.

New ¶s 10-14 describe the CCA classification of assets used in bituminous sands projects and the additional CCA that is available for certain property used in such projects.

¶s 15-17 (portions of former ¶s 5 to 7) discuss the CCA classification of various types of pipelines, including those included in new Class 49.

¶s 18-24 (portions of former ¶ 7) contain the CCA classification of various types of pipeline appendages, including those described in new paragraph (j) to Class 7.

New ¶s 25-27 indicate certain assets that are included in other CCA classes.

New ¶ 28 provides a discussion about assets included in the new schedules appended to the bulletin.

¶s 29-30 (a portion of former ¶ 4) describe certain property that is excluded from depreciable property.

¶ 31 (former ¶ 2) has been revised to include the legislative amendments to the definitions of CEE and CDE that specifically exclude depreciable property from being CEE or CDE.

New ¶s 32-35 explain certain rules affecting the calculation of CCA.

The new schedules appended to this bulletin indicate the classification for CCA purposes of certain assets used in P and NG activities, as well as certain expenditures that qualify as CEE or CDE.

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