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Experimental Allowance | Property Assessment & Taxation

Steven Eady
Steven Eady

An experimental allowance is an abnormal / extra depreciation allowance recognized for plants not producing as a normal profitable operation. This allowance is meant to apply to small pilot plants testing new methods of production these projects, if successful, will eventually end up as a commercial operation.

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Energy & Industrial Property Tax Services Experimental Allowance P R O P E R T Y T A X C O N S U LT I N G 1.403.508.7770 Energy@altusgroup.com www.altusgroup.com 2020 4th Street SW, Suite 310, Calgary, AB T2S 1W3 Canada Our consultation services: Lunch n Learns: Property Tax 101 Property Assessment & Taxation Estimates Other Resourceful Property Tax Documentation An experimental allowance is an abnormal / extra depreciation allowance recognized for plants not producing as a normal profitable operation. This allowance is meant to apply to small pilot plants testing new methods of production these projects, if successful, will eventually end up as a commercial operation. The amount of extra depreciation applied depends on the stage the project is in. The following are the recommended reductions for various stages: Construction and testing The stage where the plant has been constructed and the system has not yet proven to work successfully. Little or no production. Developing system and refining process This is the stage where most of the experimenting is done and the methods developed are beginning to show success. Producing experimental plant The stage where the process has proved itself, but experimentation is being carried on to perfect the process. Generally there is a fair amount of production at this stage. Final usage The plant is now considered either viable as a commercial plant, or a unit of a large commercial plant. Recommended allowance ranges from 0% - 80%. Be planned and directed towards testing a novel concept or process Have a small scale in relation to what would be normal for a commercial process Have a short time to completion two to five years Not suggest immediate commercial viability - when the broad economics of the scheme are considered with the technical uncertainty Assessor discretion - only applies in Alberta, Canada To be classified as an experimental plant, a project must: 1. 2. 3. 4. 5.

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Experimental Allowance | Property Assessment & Taxation

  • 1. Energy & Industrial Property Tax Services Experimental Allowance P R O P E R T Y T A X C O N S U LT I N G 1.403.508.7770 Energy@altusgroup.com www.altusgroup.com 2020 4th Street SW, Suite 310, Calgary, AB T2S 1W3 Canada Our consultation services: Lunch n Learns: Property Tax 101 Property Assessment & Taxation Estimates Other Resourceful Property Tax Documentation An experimental allowance is an abnormal / extra depreciation allowance recognized for plants not producing as a normal profitable operation. This allowance is meant to apply to small pilot plants testing new methods of production these projects, if successful, will eventually end up as a commercial operation. The amount of extra depreciation applied depends on the stage the project is in. The following are the recommended reductions for various stages: Construction and testing The stage where the plant has been constructed and the system has not yet proven to work successfully. Little or no production. Developing system and refining process This is the stage where most of the experimenting is done and the methods developed are beginning to show success. Producing experimental plant The stage where the process has proved itself, but experimentation is being carried on to perfect the process. Generally there is a fair amount of production at this stage. Final usage The plant is now considered either viable as a commercial plant, or a unit of a large commercial plant. Recommended allowance ranges from 0% - 80%. Be planned and directed towards testing a novel concept or process Have a small scale in relation to what would be normal for a commercial process Have a short time to completion two to five years Not suggest immediate commercial viability - when the broad economics of the scheme are considered with the technical uncertainty Assessor discretion - only applies in Alberta, Canada To be classified as an experimental plant, a project must: 1. 2. 3. 4. 5.