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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Experimental Allowance
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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:
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