Canadian Government Wants to Clarify Tax Issues for Wind

The Canadian government is reviewing the definition of a test wind turbine, which may lead to changes under federal tax law.

OTTAWA, Ontario, CA, 2001-11-15 [] The Canadian Renewable & Conservation Expense was introduced to encourage the generation of wind and other renewable energies in Canada by creating a “more level playing field” between the tax systems applicable to renewable and non-renewable energy production, says Paul Berg-Dick of Finance Canada. Providing tax support under CRCE to test wind turbines was considered by industry representatives to be analogous to the ‘first well’ provision for oil and gas wells as an exploration expense. The Department of Finance, with Natural Resources Canada and the Canada Customs & Revenue Agency, are reviewing the definition and have asked for the views of the Canadian Wind Energy Association on possible changes. “We believe that clarity in the definition and administration of test wind turbine are important elements in ensuring a viable, stable investment climate for this industry,” says Berg-Dick. Wind developers can apply to have a ‘test wind turbine’ become eligible for accelerated tax write-off, but an advance ruling by NRCan is not binding on the tax department, and the wind industry is concerned that a future reclassification would reverse the tax status. “A reclassification would be very problematic for investors in the wind energy industry,” concedes Berg-Dick, and Finance officials want to review “better procedures” to ensure that there is greater certainty to future investors. The law also uses the term, “taxpayer’s site,” which is not a defined term, and CanWEA has been asked to clarify that term.

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