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, this credit does not need a company to pay tax to receive it. The credit 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 cardon heating equipment as well as non-road zero emission vehicles (ZEV) and charging equipment. Budget 2023 expanded eligibility under the credit to include geothermal energy systems. The credit will be reduced to 15% in 2034 and fully phased out after 2034.
Canadian resident corporations are eligible for the Clean Technology Investment Tax Credit. Canadian corporations that are members of partnerships are also able to claim an allocation of the credit on generally the same basis as certain other Investment Tax Credits.
The credit is available in respect of the cost of “clean technology property” that must: 1. be situated in Canada and intended for use exclusively in Canada, and 2. not be used, or acquired for use or lease, for any purpose before being acquired by the taxpayer
The types of property that may qualify as clean technology property include the following: 1. zero-emission electricity generation technologies, like solar, wind, small hydro, concentrated solar energy and small modular nuclear reactors; 2. electricity storage systems that do not use fossil fuels in their operations, like batteries, flywheels, compressed air energy storage, pumped hydroelectric energy storage, gravity energy storage and thermal energy storage; 3. certain active solar heating equipment, air-source heat pumps and ground-source heat pumps; 4. equipment used exclusively for generating electrical energy or heat (or a combination) solely from geothermal energy, but excluding any equipment that is part of a system that extracts both heat from geothermal fluid and fossil fuel for sale or use; and 5. non-road zero-emission vehicles that are fully electric or powered by hydrogen, and charging or refueling equipment primarily used to support such vehicles.
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.
Please 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.
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