Clean Technology Investment Credits

What Is the Clean Technology ITC Bill C 59?

The Clean Technology ITC (Investment Tax Credit) Bill C-59 is a legislative proposal aimed at promoting the development and adoption of clean technologies in Canada. This bill is designed to provide financial incentives in the form of tax credits to businesses and individuals who invest in clean technologies. These tax credits serve as a way to encourage cleaner and more sustainable practices by making clean technologies more affordable and accessible.

What Are Clean Energy Tax Credits?

Clean energy tax credits are federal incentives designed to encourage investment in renewable energy technologies. The CT ITC specifically offers a refundable tax credit equal to 30 percent of the capital cost of eligible green technology for a property you acquire within a specific time frame.

Your property is eligible for this credit under certain conditions, such as if you have equipment used regularly to generate electricity from solar energy, stationary electricity storage that doesn’t use fossil fuels, or active solar heating equipment.

How Is ITC Calculated?

The Investment Tax Credit (ITC) is calculated based on the capital cost of clean technology (CT) property that is acquired and becomes available for use within specific timeframes. The CT ITC rate can be up to 30% of the capital cost for CT property acquired and available for use from March 28, 2023, to December 31, 2033.

For property acquired and available for use up to 2034, the CT ITC rate may be up to 15%. It's important to note that the availability of the CT ITC will cease after 2034.

Do Clean Technology Investment Credits Save Money?

Receiving clean technology investment credits can provide significant cost savings for individuals and businesses. These credits can help offset the upfront cost of purchasing and installing clean technologies, making them more financially feasible.

Can You Combine These Credits With Other Incentives?

In many cases, Clean Technology Investment Credits can be combined with other incentives, such as utility company rebates, province-level tax credits, or federal grants. Stacking multiple incentives can significantly reduce the net cost of your investment. Make sure to research and understand all available incentives and how they can work together to maximize your return on investment.

How Do Credits Impact Your Taxes?

Clean Technology Investment Credits reduce your tax liability directly, meaning they’re subtracted from the taxes you owe rather than just reducing your taxable income. This means if you owe $5,000 in taxes and receive a $2,000 credit, your tax liability would be reduced to $3,000.

Are These Credits Refundable?

Most Clean Technology Investment Credits are non-refundable, meaning they can only reduce your tax liability to zero. However, some programs allow unused credits to roll over into future tax years. It's essential to consult with a tax professional for specific information regarding the refundability of clean technology investment credits in your area.

What Types of Technologies Qualify for Clean Technology Investment Credits?

The Clean Technology ITC Bill C-59 defines clean technologies as those that contribute to the reduction of greenhouse gas emissions and/or the conservation of natural resources.

This includes green technologies such as:

The list of eligible clean technologies is not limited to the above examples, as the bill also includes a provision for new and emerging technologies that meet the criteria. This allows for flexibility and encourages innovation in the clean technology sector.

Environmental Benefits of Investing in Clean Technologies

Clean technologies offer a range of benefits that go beyond just cost savings.

This includes:

• Reduced greenhouse gas emissions: Clean technologies produce fewer or no greenhouse gas emissions, helping to mitigate climate change and reduce your carbon footprint.
• Improved air quality: By replacing fossil fuel-based energy sources with cleaner alternatives, clean technologies help reduce air pollution and improve the quality of the air we breathe.
• Conservation of natural resources: Clean technologies prioritize the efficient use of resources, minimizing waste and promoting conservation.
• Preservation of ecosystems: Investing in clean technologies supports the preservation of ecosystems by minimizing the negative impact on biodiversity and natural habitats.
• Water conservation: Clean technologies often require less water for operations, contributing to water conservation efforts and ensuring the sustainable management of this vital resource.

By harnessing the power of clean technologies, we can pave the way for a greener future, mitigate the effects of climate change, and preserve our planet.

Can Switching to Solar Energy Make You Eligible for Tax Credits?

There are many tax credits and rebates that become available to you when we install your solar energy system. For example, the Canada Greener Homes Loan offers an interest-free loan to a maximum of $40,000 with a repayment term of 10 years, just for making your home more energy-efficient.

The CT ITC also applies to you as a solar energy user, with a few stipulations regarding the technology that qualifies and the conditions of ownership of the property. If you have a business that uses solar power, you’re also eligible for the Accelerated Capital Costs Allowance (ACCA) under the Tax Income Act.

CT ITC Property Eligibility

The Clean Technology Investment Tax Credit (CT ITC) can give you back a percentage of the cost of clean technology property you purchase, depending on when it’s installed and put into use.

If you buy and use clean technology (such as solar panels) between March 28, 2023, and December 31, 2033, you can get back up to 30% of the cost. However, if you buy and use property in 2034, the tax credit will only be up to 15%. After 2034, the CT ITC will no longer be available.

For example, if you install a solar system in 2023 for $10,000, you could potentially claim up to $3,000 (30%) as a tax credit. However, if you install it in 2034, you could only claim up to $1,500 (15%).

Can You Claim the CT ITC Multiple Times?

Generally, you can only claim one CT ITC for the same eligible property. This rule ensures that there’s no duplication of tax benefits for the same asset.

However, if your project involves multiple types of eligible property, you can claim multiple ITCs. For instance, if you're installing both solar panels and an energy storage system as part of your renewable energy project, you may be able to claim the CT ITC for the solar panels and other applicable ITCs for the energy storage system, as they are considered different types of eligible property.

Ready Solar Inc’s Solutions: Become Eligible for Tax Credits

By choosing our solar solutions, you can qualify for significant tax credits that enhance your investment in renewable energy.

We provide:

• Solar panel and microgrid installation
• System monitoring and management
• Assistance with credit or rebate claiming/application process
• Maintenance and repair services

How Do You Apply for a Clean Energy Program?

You don’t have to apply for the CT ITC. To claim it, you simply include the eligible expenses on your tax or trust return when your property meets the criteria outlined by the Canadian Revenue Agency (CRA).

However, there's a loan application process for other incentives like the Canada Greener Homes Loan.

Here are a few of the steps in this process which we can assist with:

1. Schedule a pre-retrofit evaluation (solar systems are generally considered an eligible retrofit).
2. We help you plan your solar retrofit accordingly (required before the next steps).
3. Submit your loan application before we begin the installation.
4. We complete your retrofit.
5. Get a post-retrofit evaluation from an energy advisor.
6. Submit the results of your evaluation and request the funding from your application portal.

Are There Deadlines for Clean Technology Investment Credits Applications?

Yes, there are deadlines for Clean Technology Investment Credits (CT ITC) applications. The CT ITC is a refundable tax credit for capital invested in the adoption and operation of new clean technology (CT) property in Canada from March 28, 2023, to December 31, 2034. To be eligible for the CT ITC, you must apply within 90 days after the end of the taxation year in which the investment is made. It's important to submit your application in a timely manner to ensure you can take advantage of this valuable incentive.

What Happens After Claiming the CT ITC?

After submitting your claim for the Clean Technology Investment Credit, it's possible that the Canada Revenue Agency (CRA) may review it to ensure you meet the eligibility criteria and that the information provided is accurate.

If the CRA identifies any discrepancies or if you disagree with their assessment, there are established processes to address and resolve such issues.

Once the credit is approved and applied to your tax liability, you will start enjoying the financial benefits of your clean technology investment through reduced energy costs and increased long-term savings.

What Are the Recapture Rules for the CT ITC?

If, within ten years of acquiring the property, you decide to convert it to a non-clean technology use, export it from Canada, or dispose of it, there is a possibility that you may need to pay back a portion of the clean technology investment credit. This is known as recapture.

This recapture rule ensures compliance and avoids any unexpected tax liabilities. To stay on the right side of the regulations, you should keep detailed records of any changes to the use or disposition of your clean technology property and consult with a tax professional if you have any concerns.

What Is the Payback Period for Investments Covered by These Credits?

The payback period for clean technology investments depends on the upfront cost, the credit amount received, and the long-term energy savings. A solar panel installation with a 30% tax credit might pay for itself in energy savings within five to ten years. After the payback period, the energy savings continue to provide financial benefits for the individual or business owner.

What’s a Post-Retrofit Evaluation?

After we have outfitted your property with solar panels, a trusted, certified energy advisor will conduct the post-retrofit evaluation. This assessment verifies that the retrofit was completed properly and measures the energy improvements achieved. The advisor will inspect and test various aspects of your system to ensure compliance with program standards.

You’ll receive an updated energy report detailing your property’s new energy efficiency rating and confirming eligibility for any applicable tax credits or incentives. This report is crucial for finalizing incentive applications, as it provides the documentation needed to claim your Clean Technology Investment Tax Credit.

We can help you arrange for a post-retrofit evaluation once we install your system.

What To Expect During CT ITC Application Review

If your claim is selected for further review, the Canada Revenue Agency (CRA) may require additional information about your solar project or the expenses being claimed. This review process ensures that all necessary requirements, including labour costs, have been properly met.

In some cases, the CRA may request an on-site or virtual meeting to ask further questions or clarify details about the claim. You may also need to provide supporting documents to verify your expenses and confirm that you meet all program requirements.

Once the CRA completes the review, they’ll provide a written summary of their findings. If no changes are necessary, the review will be closed, and no further action is required. If the CRA determines that adjustments are needed, you will have 30 days to respond to the review summary before any changes are confirmed and they reassess your claim.