OTTAWA: The Canadian Government has announced to establish a new capital cost allowance (CCA) for the liquefied natural gas (LNG) industry.
The CCA will be available at a combined rate of 30 percent for equipment used in natural gas liquefaction (Class 47 property) and at 10 percent for buildings used for LNG operations. The tax relief will be available for capital assets acquired after February 19, 2015, and will be offered until 2025.
Unlike current expenditures, such as wages, the cost of capital property generally cannot be fully deducted in the year the property is acquired. A portion of the capital cost of a depreciable property is deductible as CCA, with the CCA rate for each type of property set out in the Income Tax Regulations. CCA rates are typically set so that the cost of depreciable property is recognized over the useful life of the property. Accelerated CCA treatment allows taxpayers to more quickly recover the cost of their capital investment.
