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Clean Energy Tax Credit in Canada: Coming in 2024

Canadian Clean Technology Investment Tax Credit will let you return a third of your investment in solar through taxes! That is if the government decides to put it into action. What is the program and how far is the progress? Let’s take a closer look at the Clean Energy Tax Credit in Canada.

Clean Energy ITC makes solar 30% cheaper in Canada

Canada’s Clean Technology ITC is a refundable tax credit of up to 30% of the clean technology property cost. In other words – you buy a solar system and the government returns you 30% of it through income taxes.

2024

estimated effective year of Clean Tech ITC

The credit was first announced in the 2022 Fall Economic Statement, with an update in 2023 and applies to a wide range of clean technologies, including solar. Draft legislation for this tax credit received its first reading in Parliament on November 30, 2023. The program is planned to start in 2024 but hasn’t yet. The effective date is still unknown. 

Canadian ITC applies only to businesses

The ITC is available only to taxable Canadian corporations and partnerships in which a taxable Canadian corporation is a partner. Individuals and tax-exempt entities are not eligible.

To be eligible for the tax credit, ensure your solar system is new, situated in Canada and intended for use exclusively in Canada. If you export it out of Canada or dispose of it within 20 years after purchase, the tax can be recaptured.

The credit is available for solar equipment acquired from March 28, 2023 until December 31, 2033. The equipment acquired in 2034 would be eligible for a 15% refundable tax credit. After 2034, the tax credit would not be available.

Canada ITC works similarly to Solar Tax Credit in US

To understand better what Clean Energy Tax Credit in Canada is, it makes sense to compare it to a similar program in the US — the Solar Tax Credit. American Investment Tax Credit was enacted back in 2006. Since then, the US solar industry has grown more than 200 times: from around 700 Megawatts of installed PV capacity to over 160,000, according to SEIA. If Canada adopts ITC, it may significantly improve the growth rates of the solar industry there.

Canada
United States
Rate
30% from 2023 to 2033
15% in 2034
30% from 2022 to 2032
26% in 2033
22% in 2034
Available to
Taxable Canadian corporations and partnerships
Individuals, businesses, and non-profit organizations
Valid until
2035
2035


Both Canada and the United States have implemented clean energy tax credits to encourage investments in renewable energy sources and clean technologies. The key difference between the two is that the US tax credit is available both to businesses and homeowners. In Canada, only corporations can claim it. Perhaps, after evaluating its impact, the government will extend it to the private sector as well.

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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