Clean Hydrogen Investment Tax Credit (ITC)
Highlights
If your business is looking to invest in clean hydrogen technology, the Clean Hydrogen Investment Tax Credit (ITC) is a fantastic opportunity for you. This program offers refundable tax credits for acquiring and commissioning clean hydrogen assets. This means you can get money back even if your business doesn’t owe taxes, making it a smart financial move.
What’s in it for you? By participating, you can save on various expenses, including legal, accounting, engineering fees, and site preparation costs. Plus, adopting low-carbon hydrogen production methods can significantly reduce your carbon footprint, positioning your business as a leader in green innovation. This not only helps the environment but also enhances your brand's reputation.
Applying for this program is straightforward, and if approved, it can free up capital for other areas of your business. Imagine reinvesting those savings into growth and innovation. This tax credit is designed to make sustainable technology more accessible and financially viable for businesses like yours.
Financing Details
The Clean Hydrogen Investment Tax Credit (ITC) offers a Refundable Tax Credit. This means that if the tax credit amount exceeds the taxes you owe, the excess amount will be refunded to you. This tax credit is specifically designed to support the acquisition and operational costs of clean hydrogen assets.
Repayment Terms and Interest Rates:
- There are no repayment terms or interest rates associated with this tax credit as it is not a loan but a direct credit against taxes owed.
Eligible Expenses:
- The tax credit covers the capital costs involved in acquiring, installing, and commissioning eligible clean hydrogen assets. This includes expenses such as:
- Legal, accounting, and engineering fees directly related to the acquisition of the property.
- Costs for site preparation, delivery, installation, and testing of the equipment.
- Expenses related to materials, labor, and overheads for self-manufactured property.
Ineligible Uses of Funds:
- The tax credit cannot be used towards:
- Preliminary work expenses not directly related to the acquisition, construction, manufacturing, or installation of qualifying clean hydrogen property.
- Costs associated with the transmission, transport, off-site distribution, or storage of hydrogen.
Fees:
- There are no additional fees directly associated with claiming this tax credit.
Qualifications
- Be a taxable Canadian corporation (including those that are partners in a partnership)
- Have an eligible clean hydrogen project
- Acquire qualifying clean hydrogen property that becomes ready for service between March 28, 2023, and December 31, 2034
- Produce hydrogen with a carbon intensity below 4 kilograms of CO2 equivalent per kilogram of hydrogen produced
- For projects producing clean ammonia, demonstrate the capacity to meet the needs of the clean ammonia production facility
- If hydrogen and ammonia production facilities are not in the same location, demonstrate the feasibility of transporting hydrogen between the facilities
- Ensure the qualifying clean hydrogen property has not been used or acquired for use or lease for any purpose before its acquisition
- Exclude any preliminary work expenses not directly related to the acquisition, construction, manufacturing, or installation of qualifying clean hydrogen property
- Ensure the project is located within Canada
Description
The Clean Hydrogen Investment Tax Credit (ITC) offers refundable tax credits for Canadian businesses investing in clean hydrogen technology. If your business acquires eligible clean hydrogen assets between March 28, 2023, and December 31, 2034, you can benefit from this program. The goal is to help you adopt low-carbon hydrogen production methods, which can significantly reduce your carbon footprint.
What’s in it for you? You can get tax credits for various expenses, including the costs of acquiring, installing, and commissioning clean hydrogen equipment. This includes legal, accounting, engineering fees, and site preparation costs. The tax credit is refundable, meaning you can get money back even if your business doesn’t owe taxes.
Why should you care? This program can help you save money while investing in sustainable technology. By reducing your carbon emissions, you not only contribute to a cleaner environment but also position your business as a leader in green innovation. Plus, the credits can free up capital, allowing you to reinvest in other areas of your business.
Program Steps
Respond to the pre-screening questionnaire
Complete the questionnaire to check initial eligibility.Conduct an Environmental Impact and Integration Criteria (EIIC) evaluation
Assess the environmental integration and impact of your project.Calculate the expected carbon intensity
Determine the carbon intensity of your project according to the guidelines.Obtain a validation report
Secure a validation report from an eligible third party to confirm your project's eligibility and calculations.Prepare the necessary documentation
Gather the following documents to support your project proposal:- Project plan detailing the clean hydrogen production methods
- Financial statements or projections
- Validation report from the third party
- Any relevant legal, accounting, or engineering documentation
- Site preparation and installation cost estimates
Submit your project plan
Submit your detailed project plan, along with all gathered documents, to Natural Resources Canada (RNCan).
