Is There a 30% Tax Credit for Solar Panels in Canada?
Canada’s Clean Technology Investment Tax Credit (CT ITC) is available to taxable Canadian corporations (including a taxable Canadian corporation that is a member of a partnership) and mutual fund trusts that operate as real estate investment trusts (REITs), including such a trust that is a member of a partnership.
Unfortunately, the CT ITC is not available to individual taxpayers or homeowners.
Unlike the Residential Clean Energy Credit for solar panels and home battery systems in the United States, no federal program in Canada currently offers a 30% tax credit for homeowners purchasing and installing solar panels.
What Is the Clean Technology Investment Tax Credit (CT ITC)?
The Clean Technology Investment Tax Credit, also known as the CT ITC, is a federal government tax incentive designed to accelerate the adoption of clean energy technologies by taxable corporations and real estate investment trusts across Canada.
The CT ITC is a refundable tax credit for capital invested in adopting and operating new clean technology (CT) property in Canada from March 28, 2023, to December 31, 2034.
Eligible CT property may qualify for an ITC of up to 30% of the capital cost if it is acquired and becomes available for use between March 28, 2023, and December 31, 2033.
The CT ITC rate is reduced to 15% for property acquired and that becomes available for use in 2034.
After 2034, the CT ITC is scheduled to end.
Who Is Eligible for the Clean Technology Investment Tax Credit?
The Clean Technology Investment Tax Credit targets corporations and real estate investment trusts.
Individual Canadian taxpayers and homeowners DO NOT qualify for the CT ITC.
According to the Canadian Revenue Agency, the following two corporate entities may qualify for the CT ITC.
1. A taxable Canadian corporation (including a taxable Canadian corporation that is a member of a partnership)
2. A mutual fund trust that is a real estate investment trust (including such a trust that is a member of a partnership)
Additionally, “employers who elect to meet the labour requirements can avoid claiming the reduced tax credit rate.”
What’s Covered by the CT ITC Tax Credit?
The CT ITC covers the following new clean technology property situated in and intended for use exclusively in Canada.
Equipment used to generate electricity from solar, wind, and water energy
Stationary electricity storage equipment that does not use any fossil fuel in operation (such as batteries and pumped hydroelectric storage)
Active solar heating equipment, air-source heat pumps, and ground-source heat pumps
Non-road zero-emission vehicles and related charging and refueling equipment that is used primarily for such vehicles
Equipment used exclusively for the purpose of generating electrical energy or heat energy (or a combination of both), solely from geothermal energy, unless it is part of a system that extracts fossil fuels for sale
Concentrated solar energy equipment
Small modular nuclear reactors
Eligible corporations and REITs “may claim multiple clean economy ITCs for the same project, if the project includes different types of eligible property.”
Technical guidance regarding specific eligibility requirements for CT property can be found here.
How to Claim the CT ITC
Taxable Canadian corporations and real estate investment trusts (REITs) can claim one or more CT ITC credits by completing Schedule 75, Clean Technology Investment Tax Credit (2023 and later tax years) (T2SCH75) and filing it with their corporate or mutual trust tax return.
For corporations, the ITC is claimed on line 155 of Schedule 31 (T2SCH31).
Filing instructions differ for partnerships and mutual trusts that qualify for the credit.
Frequently Asked Questions
Are Homeowners Eligible for the Clean Technology Investment Tax Credit?
No. Homeowners and individual taxpayers do not qualify for the Canadian Investment Tax Credit. The CT ITC is only available to taxable Canadian corporations (including a taxable Canadian corporation that is a member of a partnership) and mutual fund trusts that operate as real estate investment trusts (REITs), including such a trust that is a member of a partnership.
Are Solar Panels Eligible for the CT ITC?
Yes. Solar photovoltaic (PV) panels and other clean energy systems are eligible for the CT ITC. However, the CT ITC is only available to taxable Canadian corporations and real estate investment trusts (REITs). It is not available to homeowners and individual taxpayers in Canada.