Federal Cleantech Tax Credit Consultations.

As previously reported, the Government of Canada launched a series of consultations with Canadians on specific Budget 2023 measures aimed at, among other things, growing the clean economy.  The consultation invites feedback on the proposed measures as the government works towards implementation of these previously announced priorities. 

Growing Canada’s Clean Economy was a central pillar of Budget 2023, including a list of clear and predictable investment tax credits. The government is seeking feedback on design details for the: 

  • New, refundable Clean Electricity Investment Tax Credit and Clean Technology Manufacturing Investment Tax Credit; 

  • Clean Hydrogen Investment Tax Credit, announced in the 2022 Fall Economic Statement; 

  • Clean Technology Investment Tax Credit, introduced in the 2022 Fall Economic Statement; and 

  • Proposed enhancements to the Investment Tax Credit for Carbon Capture, Utilization, and Storage, which were introduced in Budget 2023. 

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. 

Retroactive to March 28, 2023, the proposed legislation also indicates the following schedule of declining tax credits over time: 

  • 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. 

Proposed Legislation changes can be found here (see especially pages 36-48): https://fin.canada.ca/drleg-apl/2023/ita-lir-0823-l-2-eng.pdf 

Explanatory Notes can be found here (see especially pages 86-105): https://fin.canada.ca/drleg-apl/2023/ita-lir-0823-n-1-eng.pdf 

HRAI continues to engage with the Minister of Finance about securing a more focused consultation document to outline these proposed tax measures.  In the meantime, comments on these proposals maybe sent to the Department of Finance at the following email address: cleangrowthITC-CIIcroissancepropre@fin.gc.ca. 

HRAI will be making comments on these proposed measures and will incorporate member inputs.  For more information, or to share your input, contact Martin Luymes at 1-800-267-2231 ext. 235 or email mluymes@hrai.ca. 

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