Calculate Your LNG Net Income

Your LNG net income is based on your net operating income from your liquefaction activities at an LNG facility and your recaptured capital investment account balance, minus deductions for your net operating loss account and capital investment account.

You pay 3.5% LNG income tax on your net income from your liquefaction activities. The tax rate will increase to 5% for taxation years beginning on or after January 1, 2037.

Any tax you paid at the 1.5% rate may later be applied against tax owing at the higher rate. Learn how to calculate how much LNG tax you may have to pay.

To calculate your net income:

  1. Calculate your net operating income for the taxation year from your liquefaction activities at an LNG facility
  2. Add your recaptured capital investment account balance
  3. Subtract your net operating loss account deduction for the taxation year
  4. Subtract your capital investment account deduction for the taxation year

When you calculate net income, the balance in your net operating loss account must be deducted before the capital investment account balance is deducted. You can use both deductions to reduce your net income to zero, but your net income can’t be reduced to a negative balance.

Partnerships

Partnerships engaged in liquefaction activities don't calculate net income at the partnership level. Amounts used to calculate each partner's net income, such as the capital investment account balance, are calculated by the partnership and then allocated to the partners.