Federal Clean Technology Investment Tax Credits (CTITC) Now Available (Finally!)

Late last month, the Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources, and the Honourable Marie-Claude Bibeau, Minister of National Revenue, at long last announced the passing into law of the first four Clean Economy Investment Tax Credits: the Clean Technology ITC, the Carbon Capture, Utilization and Storage (CCUS) ITC, the Clean Technology Manufacturing ITC, and the Clean Hydrogen ITC.  Originally announced in the 2023 Federal budget, these credits required some additional legislative steps before becoming law.

With the Royal Assent of Bill C-59, the Fall Economic Statement Implementation Act, 2023, eligible businesses can now apply for and claim the Clean Technology and CCUS ITCs. The Clean Technology ITC and CCUS ITC are anticipated to provide eligible companies approximately $11.4 billion in support through 2027–28.

With the Royal Assent of Bill C-69, the Budget Implementation Act, 2024, No. 1, eligible businesses should be able to apply for tax credits this fall for clean technology manufacturing and clean hydrogen projects. Further information on applying for the Clean Technology Manufacturing ITC and Clean Hydrogen ITC will be provided in the coming months.

Of more interest to the HVACR industry, the Clean Technology ITC will provide support to qualifying taxpayers who are investing capital in specified clean technologies in Canada. The Canada Revenue Agency (CRA) is responsible for administering the Clean Technology ITC, including assessing claims and issuing payments, while Natural Resources Canada (NRCan) is responsible for providing guidance on what qualifies as a clean technology property. Examples of eligible clean technologies include clean electricity generation equipment such as wind turbines and solar panels, stationary electrical energy storage, low-carbon heating systems such as ground and air source heat pumps, and non-road zero-emission vehicles.

The Clean Technology Manufacturing ITC will provide support to Canadian companies that are manufacturing or processing clean technologies and their precursors, providing support for 30 percent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals.

NRCan and the CRA have worked closely to develop a seamless service experience for businesses seeking to claim these Clean Economy ITCs, centralized on the Clean Economy Investment Tax Credits webpages. As more information becomes available from NRCan and/or CRA, including about the Clean Technology Manufacturing ITC and Clean Hydrogen ITC, this webpage will be updated. The federal government is following through on its commitment to deliver on the ITCs, which are already spurring investments and helping Canadian businesses compete and succeed while reducing emissions and will bring forward the full suite of ITCs to Canadians in the near term.

The Clean Technology Investment Tax Credit, which will be of interest to many HRAI members, includes the following qualifying equipment:

  • Equipment used to generate electricity from solar, wind and water energy;
  • Stationary electricity storage equipment, but excluding equipment that uses any fossil fuel in operation;
  • Active solar heating equipment, air-source heat pumps and ground-source heat pumps;
  • Equipment used exclusively for the purpose of generating electrical energy or heat energy, or a combination of electrical energy and heat energy, solely from geothermal energy, but excluding any equipment that is part of a system that extracts both heat from a geothermal fluid and fossil fuel for sale or use;
  • Concentrated solar energy equipment; or
  • Small modular nuclear reactors.

 

The legislation provides the following schedule of declining tax credits:

  • before March 28, 2023 à nil;
  • on or after March 28, 2023 and before January 1, 2034 à 30%;
  • after December 31, 2033 and before January 1, 2035 à 15%; and
  • after December 31, 2034 à nil.

 

HRAI applauds the introduction of these measures but the association also understands that, for these measures to be effective, the private sector – most notably commercial HVACR contractors – will need to be knowledgeable and capable of educating their clients about the significant tax benefits that will flow from making these investments.  HRAI will be working with NRCan and CRA to host webinars and to provide guidance materials to aid contractors.

 

More Information:

 

For more information, contact Martin Luymes at 1-800-267-2231 ext 235 or email mluymes@hrai.ca.

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