The Government of Canada has passed long-awaited legislation to create a new refundable investment tax credit for clean technology property.
Bill C-59, titled "An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023", provides for, among other things, a refundable investment tax credit to qualifying businesses that acquire eligible clean technology equipment. The bill received royal assent on June 20, 2024, and is expected to come into force shortly.
Under this bill, "clean technology property" is defined to include certain equipment used to generate electricity from solar, wind and water energy, electricity storage equipment, and small modular nuclear reactors. The bill provides for a refundable investment tax credit of up to 30% of the capital costs of such clean technology property that was acquired between March 28, 2023 and December 31, 2033. This rate will be reduced to 15% for such property acquired in 2034. The refundable investment tax credit will not be available from 2035 onwards.
The specified percentage for the clean technology investment tax credit is reduced by 10% unless the claimant meets certain labour requirements related to the installation of the clean technology property (i.e. paying a prevailing wage and meeting minimum apprenticeship hours).
Many renewable energy developers and other project stakeholders have been eagerly awaiting the passage of Bill C-59 since this investment tax credit was first announced as part of Budget 2023. Over the past 15 months, and although this investment tax credit was not yet enacted into law, it was nonetheless included in various financial models for renewable energy projects on the assumption that it would be available to project proponents in due course.
Vittoria Bellissimo, President and CEO of the Canadian Renewable Energy Association (CanREA), expressed a positive view on how this investment tax credit will impact the renewable energy industry: "The Clean Technology ITC will drive momentum for the renewable energy and energy storage industries in Canada," Bellissimo said. "It will make Canada a more competitive place to invest, creating new opportunities for our members in all provinces and territories." (Quote reprinted with permission.)
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