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EE 52: Amount of depreciation recovery income when compensation received
or “How to calculate recovery income when you get insurance or compensation for an item”
You could also call this:

“Tax rules when you start using an unused geothermal well”

When an unused geothermal well is brought into use, there are special rules about how to treat it for tax purposes. If something happens that’s covered by [section EE 47(6)], you need to follow these rules.

When this happens, it’s like you just bought the geothermal well on the same day the event occurred. For tax purposes, you’re treated as if you paid the cost of the well on that day. The cost is calculated based on the rules in this part of the tax law, looking at what the well cost before the event happened.

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Next up: EE 54: Cost: GST

or “How GST affects the cost of depreciable property for tax purposes”
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Part E Timing and quantifying rules
Depreciation

EE 53Unused geothermal well brought into use

  1. This section applies to a person when an event occurs to which section EE 47(6) applies.

  2. The person is treated as having acquired the geothermal well on the day on which the event occurs for the cost of the well under this subpart before the event occurs.

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