Subsection 211.92(1)
Actual Eligible Use Percentage
Administrative Policy
25 March 2025 External T.I. 2024-1039131E5 - CCUS - "actual eligible use percentage"
Aco constructed, owned, and operated a carbon capture facility to capture carbon dioxide emissions from its industrial facilities. The captured carbon was then transported through the carbon transportation pipeline system of Bco, which delivered the captured carbon to a carbon sequestration hub of Cco. However, significant unanticipated fugitive emissions of the captured carbon occurred on the pipeline, which constituted an “ineligible use” of the captured carbon as defined in s. 127.44(1).
In this context, how was the "actual eligible use percentage" computed under s. 211.92(1) in respect of the CCUS project? CRA stated:
[I]t is our view that it is the end use of captured carbon that should be used in quantifying the amount of captured carbon in both eligible and ineligible use for the purposes of the definition of “actual eligible use percentage”.
As a result, in the situation described, Aco would be required to use measurements of the end use of its captured carbon, which occur at measurement points outside of its particular project boundaries. However, as the unanticipated fugitive emissions occur within Bco’s pipeline transportation network, Aco may be able to avail itself of the relief provided in subsections 211.92(6) and (7) … because such emissions would likely be due to extraordinary circumstances outside of the control of Aco.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 211.92 - Subsection 211.92(6) | likely relief where fugitive emissions occurred outside of the taxpayer’s capture system for reasons beyond its control | 151 |
Subsection 211.92(6)
Administrative Policy
25 March 2025 External T.I. 2024-1039131E5 - CCUS - "actual eligible use percentage"
Carbon captured at Aco’s industrial facilities was then transported through the pipeline of Bco, for delivery to the carbon sequestration hub of Cco. However, significant unanticipated fugitive emissions of the captured carbon occurred on the pipeline, which constituted an “ineligible use” of the captured carbon as defined in s. 127.44(1).
CRA indicated that it was “the end use of captured carbon that should be used in quantifying the amount of captured carbon in both eligible and ineligible use” for purposes of the definition of "actual eligible use percentage" (so that Aco would be required to look at the capture in the hands of Cco). However, as the unanticipated fugitive emissions occurred within Bco’s pipeline transportation network, “Aco may be able to avail itself of the relief provided in subsections 211.92(6) and (7) … because such emissions would likely be due to extraordinary circumstances outside of the control of Aco.”
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 211.92 - Subsection 211.92(1) - Actual Eligible Use Percentage | "actual eligible use percentage" of a carbon capture project should be based on the end “use” (i.e., capture) of the carbon | 219 |