Only Canadian companies adopting clean technologies
Clean Technology Investment Tax Credit
The Canadian Federal Budget 2023, announced on March 28, 2023, included the introduction of the Clean Technology Investment Tax Credit and the Clean Electricity Investment Tax Credit. These incentives have a significant impact on businesses as they enable deductions for costs associated with renewable energy, thereby enhancing the long-term efficiency of business operations. Under the Clean Technology Investment Tax Credit, profit-making businesses can receive a refundable incentive of 30% of capital investment costs, motivating them to shift towards clean energy. Eligible investments include installing solar panels and wind power, energy storage, electric vehicles, and clean hydrogen.
You must file your Form T2038(IND) no later than 12 months after your tax return's due date for the tax year the expenditure arises. If you did not file your Form T2038(IND) with your return for the year the ITC was earned and before the deadline stated above, you have to do one of the following: 1. Fill in Form T1-ADJ, T1 Adjustment Request 2. Sign a letter showing your name, address, telephone number, and social insurance number Send Form T1-ADJ or your signed letter with a completed Form T2038(IND) to the Enquiries and Adjustment Division of your local tax centre to validate any future claim for that credit.
The Clean Technology Investment Tax Credit would be available to businesses investing in such property that is acquired and becomes available for use on or after the day of Budget 2023.
You may be eligible to claim an investment tax credit (ITC) if any of the following applies:
1. You bought certain new buildings, machinery, or equipment and they were used in certain areas of Canada in qualifying activities such as farming, fishing, logging, manufacturing, or processing (see Atlantic investment tax credit) 2. You have done work that qualifies for scientific research and experimental development (SR&ED) tax incentives (see Scientific Research and Experimental Development tax incentives) 3. You employ an eligible apprentice for whom you want to claim an apprenticeship job creation tax credit 4. You have unclaimed credits earned in the last 10 years 5. You received a T3 slip showing an amount in box 406. You received a T5013 slip showing an amount in box 186, 187 or 189 7. You have a partnership financial statement that allocates to you an amount qualifying for the ITC 8. You have an investment in a mining operation that allocates certain exploration expenditures to you 9. You created licensed child care spaces for the children of your employees
Eligible investments include installing solar panels and wind power, energy storage, electric vehicles, and clean hydrogen.
For the current year, fill in the parts A, B, C and D of Form T2038(IND) and enter the amount of your credit on line 41200 of the return. You can carry back the credit you earn for up to three years and use it to reduce your federal tax by filling in Part E of Form T2038(IND) and filing it with your paper return. You can carry forward credits earned in tax years ending after 1997 for up to 20 years by filling in Part F of Form T2038(IND) and filing it with your paper return. You may be able to claim a refund of your unused ITCs. For more information, go to Line 45400 – Refund of investment tax credit.
