Income Tax Regulations — (a)
Property, other than reconditioned or remanufactured equipment, that would otherwise be included in Class 1, 2, 8 or 48 or in Class 17 because of paragraph (a.1) of that Class (a) that is (i) electrical generating equipment, including any heat generating equipment used primarily for the purpose of producing heat energy to operate the electrical generating equipment, (ii) equipment that generates both electrical and heat energy other than, for greater certainty, fuel cell equipment, (ii.1) fixed location fuel cell equipment that uses hydrogen generated only from internal, or ancillary, fuel reformation equipment, (iii) heat recovery equipment used prima- rily for the purpose of conserving energy, or reducing the requirement to acquire energy, by extracting for reuse thermal waste that is generated by equipment referred to in subparagraph (i) or (ii), (iii.1) district energy equipment that is part of a district energy system that uses thermal energy that is primarily supplied by electrical cogeneration equipment that would be property described in paragraphs (a) to (c) if read without reference to this subparagraph, (iv) control, feedwater and condensate systems and other equipment, if that property is ancillary to equipment described in any of subparagraphs (i) to (iii), or (v) an addition to a property described in any of subparagraphs (i) to (iv), other than buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), transmission equipment, distribution equipment, fuel handling equipment that is not used to upgrade the combustible portion of the fuel, pollution abatement equipment and fuel storage facilities, (b) that (i) is situated in Canada, (ii) is (A) acquired by the taxpayer for use by the taxpayer for the purpose of gaining or producing income from a business carried on in Canada or from property situated in Canada, or (B) leased by the taxpayer to a lessee for the use by the lessee for the purpose of gaining or producing income from a business carried on in Canada or from property situated in Canada, and (iii) has not been used for any purpose before it was acquired by the taxpayer unless (A) the property was depreciable property that (I) was included in Class 34, 43.1 or 43.2 of the person from whom it was acquired, or (II) would have been included in Class 34, 43.1 or 43.2 of the person from whom it was acquired had the person made a valid election to include the property in Class 43.1 or 43.2, as the case may be, under paragraph 1102(8)(d) or 1102(9)(d), and (B) the property was acquired by the taxpayer not more than five years after the time it is considered to have become available for use, for the purpose of subsection 13(26) of the Act, by the person from whom it was acquired and remains at the same site in Canada as that at which that person used the property, and (c) that is (i) part of a system that (A) is used by the taxpayer, or by a lessee of the taxpayer, to generate electrical energy, or both electrical and heat energy, using only fuel that is eligible waste fuel, fossil fuel, producer gas, spent pulping liquor or any combination of those fuels, (B) if the system is rated to generate more than three megawatts of electrical energy, meets the following condition on an annual basis: A ≥ (2 × B + C)/(D + E/3412) where A is 11,000 BTU per kilowatt-hour, B is the energy content of fossil fuel other than solution gas (expressed as the higher heating value of the fuel) consumed by the system in BTU, C is the energy content of the eligible waste fuel, producer gas and spent pulping liquor (expressed as the higher heating value of the fuel) consumed by the system in BTU, D is the gross electrical energy produced by the system in kilowatt-hours, and E is the net useful energy in the form of heat exported from the system to a thermal host in BTU, and (C) uses fuel of which no more than 25% of the energy content (expressed as the higher heating value of the fuel) is from f