The Clean Technology Investment Tax Credit (“CTITC”) was a welcomed investment tax credit that received royal assent as part of Bill C-59 on June 20, 2024 and was designed to incentivize investments in clean technology such as equipment used to generate electricity through solar, wind and water sources.
The CTITC is a refundable tax credit available to taxpayers that make eligible investments in clean technology property that become available for use between March 28, 2023 and December 31, 2025. The credit varies depending on a variety of factors described below but can equate to as much as 30% of the cost of qualifying assets.
How to Qualify:
A qualifying taxpayer must be one of the following:
- A taxable Canadian corporation (including a taxable Canadian corporation that is a member of partnership); or
- A mutual fund trust that is a real estate investment trust.
What is Qualifying Property:
To qualify, in addition to other limitations, clean technology (CT) property must be property that is intended for use exclusively in Canada and not have been previously used or acquired for use or lease for any purpose before acquisition by the taxpayer.
Investment in the following types of clean technology property may result in a refundable credit:
- Equipment used to generate electricity from solar, wind and water energy;
- Stationary electricity storage equipment that does not use any fossil fuel in operation (such as batteries and pumped hydroelectric storage);
- Active solar heating equipment, air-source heat pumps and ground-source heat pumps;
- Non-road zero-emission vehicles and related charging and refueling equipment that is used primarily for such vehicles;
- Equipment used exclusively for the purpose of generating electrical energy or heat energy (or a combination of both), solely from geothermal energy, unless it is part of a system that extracts fossil fuels for sale;
- Concentrated solar energy equipment; and
- Small modular nuclear reactors.
How is the CTITC Calculated:
Generally, the refundable credit is calculated as the qualifying expenditure multiplied by the applicable rate based on the table below:
| Acquired after March 27, 2023 and before 2034 | Acquired after 2033 and before 2035 | |
| Labour rate achieved | 30% | 15% |
| Labour rate not achieved | 20% | 5% |
The labour rate is achieved when the following criteria are met:
- Each covered work must be compensated for their labour in accordance with the worker’s relevant collective agreement and is made aware of the requirements; and
- Reasonable effort must be made to ensure that apprentices registered in a Red Seal trade work at least 10% of the total work performed by Red Seal workers on the installation of the clean technology property.
The above requirements are seen as a high bar for taxpayers to meet and must be substantiated if the credit claim is reviewed by the CRA.
The taxpayer must attest that the labour requirements were met in the prescribed manner set by the CRA as part of the tax filing for the year the CTITC is claimed. As of the writing of this article, the prescribed form has not been released by the CRA, but details about the required attestation have been provided on the CRA’s website.
The CTITC involves detailed criteria that must be met for purposes of the labour rate requirements. Speak to your Welch LLP advisor to help assess whether you may qualify for this tax credit.
