Understanding The Clean Technology Investment Tax Credit (ITC) in Canada

On June 19, 2024, the Senate passed the Clean Technology Investment Tax Credit (ITC) as part of Bill C-59. It is being introduced along with four other tax incentives including:

• the Carbon Capture, Utilization, and Storage Investment Tax Credit,
• the Clean Electricity Investment Tax Credit,
• the Clean Technology Manufacturing Tax Credit, and
• the Clean Hydrogen Investment Tax Credit.

The passing of this bill presents a massive opportunity for businesses to save thousands on their investment in clean technology such as solar, wind, or water-powered systems. Read on to learn how you can leverage this tax incentive and save big on clean technology investments.

What is the Clean Technology Investment Tax Credit?

The Clean Technology ITC was first announced by The Department of Finance (Canada) in the 2022 Fall Economic Statement. It was later included in the 2023 federal budget as part of Bill C-59 and eventually passed by the Senate in June of 2024.

Similar to the Federal Solar ITC in the U.S., the Clean Technology ITC aims to incentivize the adoption of clean technology and accelerate Canada’s transition to a green economy and reach net-zero by 2050.

The credit will begin at 30% and will phase out to 15% and eventually 0%. Here is how it works:

• Credits will be available for investments made on or after March 28, 2023, and before January 1, 2035. 
• The credit rate will be 30% for investments made between March 28, 2023 and December 31, 2033.
• The credit rate will step down to 15% for investments made on or after January 1, 2034.
• Failure to meet the specified labour requirements may reduce the credit by an additional 10%.

Although the ITC was passed by the Senate, we are still awaiting legislation. This means that businesses will likely have to wait until fall of 2024 to claim their tax credit. 

How to claim the Clean Technology ITC

Eligible properties can claim the Clean Technology ITC credit at the same time they file their income tax return. In order to claim your tax credit, follow the steps below:

• File a prescribed form with your income tax return for the taxation year in which the property was acquired. 
• Provide documentation, such as invoices, receipts, contracts, and certificates to to the Canada Revenue Agency (CRA) upon request.

Applications must be submitted within one year after the taxpayer’s filing due date for the year in which they acquired the eligible property. This means that equipment purchased in 2025 will need to be claimed on your 2026 tax forms.

Whether you’re ready to purchase equipment or just need some assistance navigating the requirements laid out in Bill C-59, contact us today. We’ll provide you with guidance you need to get the maximum tax credit that is available to you.