The new Clean Economy ITCs (Investment Tax Credits) have just made it financially easier for your businesses to practice sustainability. Implemented by the government of Canada, these new tax credits will support sustainable projects and initiatives. The overall aim of these ITCs is to support Canada’s net-zero goals by 2050.
What are the New Clean Economy ITCs in Canada?
These are 5 new refundable clean economy ITCs. These investment tax creditsare provided as a refund on taxes paid if no more tax is payable for the year by the applicant. Applicants will only be able to claim one credit per eligible property. The new green investment tax credits available are:
Clean Technology ITC
Carbon Capture, Utilization and Storage (“CCUS”) ITC
Ideal Applicant: Businesses investing in clean technology.
Tax credit provided: 30% of investments in eligible property acquired and available for use from March 28, 2023, until the end of 2033. For property available in 2034, the credit drops to 15%.
Eligible properties: Equipment for generating electricity from renewable sources, stationary storage equipment, heat pumps, non-road zero-emission vehicles, and more.
Qualification requirements: Businesses must meet specific labour requirements, ensuring fair wages and apprenticeship opportunities. This ITC is applicable to all sectors
What is the Carbon Capture, Utilization, and Storage (CCUS) ITC?
Ideal Applicant: Businesses investing in carbon capture projects. Applicable to oil, gas, waste management, heavy industry and technology companies.
Tax credit provided: 60% of qualified expenditures for capturing carbon from ambient air and up to 50% for other carbon capture methods. Also available is a 37.5% credit for carbon transportation, storage, and use expenditures. This credit gradually decreases after 2030 and is unavailable after 2040
Eligible projects: Projects that aim to capture carbon dioxide, transport it, and store it in dedicated geological formations or use it in industrial processes like concrete production
Qualification requirements: The business must be the primary owner of the eligible equipment.
What is the Clean Hydrogen ITC?
Ideal Applicant: Businesses investing in hydrogen production.
Tax credit provided: Up to 40% for projects producing clean hydrogen, with the rate depending on the project’s carbon intensity. Investments in clean ammonia equipment qualify for a 15% credit. This ITC is available for projects that become operational between March 28, 2023, and 2034, with reduced rates for those available in 2034.
Eligible properties: Properties intended for hydrogen or ammonia production.
Qualification requirements: Property must be situated in Canada.
What is the Clean Technology Manufacturing ITC?
Ideal Applicant: Businesses investing in manufacturing equipment for clean technology and critical mineral processing.
Tax credit provided: 30% for eligible property used from 2024 to 2031, decreasing to 20% in 2032, 10% in 2033, and 5% in 2034.
Eligible properties: Machinery for manufacturing renewable energy equipment, storage systems, heat pumps, zero-emission vehicles, and more.
Qualification requirements: The property must be new when acquired, situated in Canada and intended for use exclusively in Canada. Certain requirements apply to leased equipment.
What is the Clean Electricity ITC?
Note: This Investment Tax Credit is not accepting applications at the current time. It is anticipated to open in fall 2024.
Ideal Applicant: Businesses investing in clean electricity generation, storage, and transmission.
Tax credit provided: 15% for projects generating electricity from non-emitting sources like wind, solar, hydro, and nuclear; And, stationary electricity storage systems and equipment for interprovincial electricity transmission.
Eligible projects: Projects that ae able to generate/store/transmit electricity between provinces and territories without the use of fossil duels. generate clean electricity, store electricity without the use of fossil fuels.
Qualification requirements: Projects that begun construction after March 28, 2023.
How to Apply
These tax credits offer promising opportunities for businesses willing to invest in clean technology and sustainable practices. Incorporating Clean Economy ITCs into your business strategy can significantly optimize your cash flow and support sustainable growth. For businesses seeking to navigate these opportunities, professional guidance can ensure you maximize the available benefits while aligning with regulatory requirements. Contactone of our expert consultants for a free consultationto determine whichinvestmenttax credit is best for you!
