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Clean Technology Investment Tax Credit

Last updated 3 months ago by Tom Rendle

2 minute read

Clean Technology Investment Tax Credit

The Clean Technology Investment Tax Credit is a refundable credit equal to 30% of the capital cost of eligible clean technology equipment that became available for use after March 27, 2023. As a refundable credit, it is available even if the company applying for it pays no tax in the current year.

Eligible Investments Include:

  • Equipment to generate electricity from renewable sources.
  • Stationary electricity storage equipment.
  • Low carbon heating equipment.
  • Non-road zero emission vehicles (ZEV) and charging equipment.
  • Geothermal energy systems (eligibility expanded in Budget 2023).
Phase-Out Schedule:

  • The credit will be reduced to 15% in 2034 and fully phased out after 2034.
Eligibility:

  • Canadian resident corporations.
  • Canadian corporations that are members of partnerships (claim an allocation of the credit on generally the same basis as certain other Investment Tax Credits).
Requirements:

  • The property must be situated in Canada and intended for use exclusively in Canada.
  • The property must not be used, or acquired for use or lease, for any purpose before being acquired by the taxpayer.
Types of Qualifying Clean Technology Property:

  1. Zero-emission electricity generation technologies:
    • Solar, wind, small hydro, concentrated solar energy, small modular nuclear reactors.
  2. Electricity storage systems (non-fossil fuel):
    • Batteries, flywheels, compressed air energy storage, pumped hydroelectric energy storage, gravity energy storage, thermal energy storage.
  3. Heating equipment:
    • Active solar heating equipment, air-source heat pumps, ground-source heat pumps.
  4. Geothermal energy equipment:
    • Equipment used exclusively for generating electrical energy or heat (or a combination) solely from geothermal energy (excluding systems that extract both heat from geothermal fluid and fossil fuel for sale or use).
  5. Non-road zero-emission vehicles:
    • Fully electric or powered by hydrogen, and charging or refueling equipment primarily used to support such vehicles.
Claim Process:

  • The Clean Technology Investment Tax Credit is claimed by filing a prescribed form with the claimant’s income tax return for the year in which the eligible property is acquired.
Additional Information:

  • Contact your Accountant or Tax Preparer to determine if your business qualifies for the Clean Technology Investment Tax Credit or any other federal/provincial solar energy incentives.
  • Individual taxpayers can also inquire about other solar energy incentives available Canada-wide, such as the Canada Greener Homes Grant and Canada Greener Homes Loan.