The Clean Technology Investment Tax Credit (ITC) is a government initiative aimed at promoting the adoption and operation of clean technology in Canada. This tax credit is available to taxable Canadian corporations, investing in clean energy property.
Under the Clean Technology ITC, investors can receive a 30% refundable tax credit for investments in eligible property acquired and ready for use between March 28, 2023, and December 31, 2033. Investments in eligible property acquired and ready for use in 2034 will qualify for a 15% refundable tax credit. However, no tax credit will be available for property acquired after 2034.
Eligibility Criteria
To qualify for the Clean Technology ITC, taxpayers must meet certain labour requirements, including paying workers in accordance with collective agreements and ensuring that at least 10% of labour is performed by registered apprentices in Red Seal trades. Taxpayers that do not elect to meet the labour requirements could claim the Clean Technology ITC at the above-noted rates reduced by 10 percentage points.
Types of Eligible Property
The types of property that would be eligible for the Clean Technology ITC include:
- certain equipment used to generate electricity from solar, wind and water energy;
- certain electricity storage equipment, but excluding equipment that uses any fossil fuel in operation;
- certain active solar heating equipment, air-sourced heat pumps and ground-source heat pumps;
- certain non-road zero-emission electric and hydrogen powered vehicles, and charging and refueling equipment that is used primarily for such vehicles;
- certain equipment used exclusively for the purpose of generating electrical energy and/or heat energy 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;
- certain equipment used to generate heat and/or electricity from concentrated sunlight; and certain equipment that is used to generate electrical energy and/or heat energy from nuclear fusion.
However, to be eligible for the Clean Technology ITC,
- the property must generally be situated in Canada and intended for use exclusively in Canada;
- the property must be new when acquired by the taxpayer; and
- if the property is to be leased by the taxpayer to another person,
- the lessee must be a taxable Canadian corporation or a partnership all the members of which are taxable Canadian corporations; and
- the equipment must be leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof.
Recapture Rules
It’s important to note that if eligible property is converted to a non-clean technology use, exported from Canada, or disposed of within 20 calendar years of acquisition, it may be subject to recapture of the tax credit.
Expansion to Include Waste Biomass
The 2023 Fall Economic Statement proposed expanding the Clean Technology ITC to include systems that produce electricity and/or heat from waste biomass. This expansion would be effective for eligible property acquired and ready for use on or after November 21, 2023.
How Sauber Energy Can Help
At Sauber Energy, we specialize in providing solar energy solutions for businesses. Our team of experts will work with you to assess your energy needs, design a customized solar energy system, and handle the installation process from start to finish.
In addition, we will also help you with accessing tax incentives, like the Clean Technology ITC, to help you offset the initial cost and keep you profitable. We are committed to helping businesses like yours make the switch to solar energy and create a more sustainable future for all.
Don’t just think about going solar, take action! Contact us today to learn more about how solar energy can benefit your business and help you achieve your sustainability goals. Let’s work together to make your business shine with solar! Call us now – +1 (613) 800 9933.
