Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC)
Highlights
Investing in clean technology is a smart move for your business, and the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) makes it even smarter. This program offers a refundable tax credit covering 30% of your project costs. Imagine getting back a significant portion of your investment in new machinery, equipment, and tools used in clean technology manufacturing, processing, and critical mineral extraction. This means you can modernize your operations, reduce costs, and contribute to a cleaner environment without bearing the full financial burden.
What's in it for you? Financial relief and innovation. You can use this credit for assets like industrial robots for electric vehicle production, specialized machinery for mineral extraction, and non-road electric vehicles. The credit applies to assets acquired from January 1, 2024, to December 31, 2034, but the percentage reduces starting in 2032, so acting sooner maximizes your benefit. Plus, since it's refundable, you get the money back even if you don't owe taxes, providing immediate financial support.
Qualifying for this program is straightforward, and being approved can significantly boost your business. By investing in clean technology now, you not only enhance your operational efficiency but also position your business as a leader in sustainable practices. This tax credit is a golden opportunity to innovate and grow while contributing to a greener future.
Financing Details
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) offers a refundable tax credit, which means if the credit exceeds the taxes you owe, the difference will be refunded to you. This tax credit is calculated at 30% of the capital cost of eligible properties until 2031, decreasing to 20% in 2032, 10% in 2033, and finally 5% in 2034.
Eligible Expenses:
- Costs associated with the acquisition of clean technology manufacturing or processing assets and critical mineral extraction or processing equipment.
- This includes expenses for legal, accounting, engineering services, site preparation, delivery, installation, testing, and commissioning of the assets.
- Materials, labor, and overhead costs directly attributable to self-manufactured assets are also covered.
Use of Funds:
- The funds from this tax credit must be used towards the purchase and implementation of specified machinery and equipment for clean technology and critical mineral processing.
- It is important to note that the funds cannot be used for expenses not directly related to the acquisition and installation of eligible assets.
Fees:
- There are no additional fees directly associated with claiming the CTM ITC. However, standard corporate tax filing fees and any professional fees for services required to support the claim (like accounting or legal advice) will apply as per usual business expenses.
Qualifications
- Must be a Canadian tax-paying corporation or a partnership where all members are Canadian tax-paying corporations.
- Assets must be new FTP property acquired from January 1, 2024, and ready for use by December 31, 2034.
- Assets must be located and intended to be used exclusively in Canada.
- Assets must not have been used, or intended to be used or leased, for any other purpose before acquisition by the taxpayer.
- If the asset is leased to another entity, it must be leased to a Canadian tax-paying corporation or a partnership where all members are Canadian tax-paying corporations.
- The leasing must occur in the normal business activities of the corporation, focusing on either the sale, maintenance, or rental of such assets, or activities related to financing and trade receivables.
- The asset must be used almost entirely (90% or more) for qualifying manufacturing or processing activities or in qualifying mineral production activities yielding eligible materials.
Description
This program offers a refundable tax credit to support your business in investing in clean technology. You can get 30% of your project costs covered. This includes costs for new machinery, equipment, and tools used in clean technology manufacturing, processing, and critical mineral extraction.
You can use this money for things like industrial robots for electric vehicle production, specialized machinery for mineral extraction, and non-road electric vehicles. The credit applies to assets acquired from January 1, 2024, to December 31, 2034. However, the percentage reduces starting in 2032, so it's best to act sooner.
This tax credit helps you invest in sustainable practices without bearing the full financial burden. It’s a great way to modernize your operations, reduce costs, and contribute to a cleaner environment. Plus, it's refundable, meaning you get the money back even if you don't owe taxes.
Program Steps
Calculate the Capital Cost
Determine the total cost of acquiring the property, including additional expenses like legal, accounting, site preparation, delivery, and installation.
Deduct any government or non-government assistance received or expected.Calculate the Credit Amount
The tax credit is generally 30% of the capital cost of eligible properties.
Remember, this rate will reduce to 20% in 2032, 10% in 2033, and 5% in 2034.Prepare Supporting Documentation
Gather the necessary documents, including:- Invoices and receipts for all costs included in the capital cost
- Records of legal, accounting, and engineering fees
- Statements showing the use of the property exclusively in Canada and for eligible activities
File Corporate Income Tax Return
Submit the calculated tax credit amount on your corporate income tax return.
Follow the guidelines provided by the Canada Revenue Agency (CRA) and include all necessary documents and attachments.Maintain Compliance and Prepare for Audits
Keep all records for compliance and potential audits by the CRA.
Be ready to provide additional information if requested to validate your claim.
