Fall Economic Statement Implementation Act, 2023 (S.C. 2024, c. 15)

Marginal note:Definitions

• 127.45 (1) The following definitions apply in this section.

  clean technology investment tax credit

  clean technology investment tax credit of a qualifying taxpayer for a taxation year means

  • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of clean technology property acquired by the taxpayer in the year; and

  • (b) the total of amounts required by subsection (8) to be added in computing the taxpayer’s clean technology investment tax credit at the end of the year. (crédit d’impôt à l’investissement dans les technologies propres)

  clean technology property

  clean technology property means property

  • (a) situated in Canada (including property described in subparagraph (d)(v) or (xiv) of Class 43.1 in Schedule II to the Income Tax Regulations that is installed in the exclusive economic zone of Canada) and intended for use exclusively in Canada;

  • (b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

  • (c) that, if it is to be leased by the taxpayer to another person or partnership, is

    • (i) leased to a qualifying taxpayer or a partnership all the members of which are taxable Canadian corporations, and

    • (ii) leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and

  • (d) that is

    • (i) equipment used to generate electricity from solar, wind and water energy that is described in subparagraph (d)(ii), (iii.1), (v), (vi) or (xiv) of Class 43.1 in Schedule II to the Income Tax Regulations,

    • (ii) stationary electricity storage equipment that is described in subparagraph (d)(xviii) or (xix) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding equipment that uses any fossil fuel in operation,

    • (iii) active solar heating equipment, air-source heat pumps and ground-source heat pumps that are described in subparagraph (d)(i) of Class 43.1 in Schedule II to the Income Tax Regulations,

    • (iv) a non-road zero-emission vehicle described in Class 56 in Schedule II to the Income Tax Regulations and charging or refuelling equipment described in subparagraph (d)(xxi) of Class 43.1 in Schedule II to the Income Tax Regulations or subparagraph (b)(ii) of Class 43.2 in Schedule II to the Income Tax Regulations that in each case is used primarily for such vehicles,

    • (v) equipment used exclusively for the purpose of generating electrical energy or heat energy, or a combination of electrical energy and heat energy, solely from geothermal energy, that is described in subparagraph (d)(vii) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding any equipment that is part of a system that extracts fossil fuel for sale,

    • (vi) concentrated solar energy equipment, or

    • (vii) a small modular nuclear reactor. (bien de technologie propre)

  concentrated solar energy equipment

  concentrated solar energy equipment means equipment, other than excluded equipment, used all or substantially all to generate heat or electricity, or a combination of heat and electricity, exclusively from concentrated sunlight, including

  • (a) reflectors and related solar tracking systems;

  • (b) thermal receivers;

  • (c) thermal energy storage equipment;

  • (d) electrical generating equipment;

  • (e) heat transfer fluid systems;

  • (f) electrical energy storage equipment;

  • (g) transmission equipment;

  • (h) equipment for the distribution of heat energy;

  • (i) structures whose sole function is to support or house concentrated solar energy equipment; and

  • (j) ancillary instrumentation and controls including weather monitoring systems. (matériel d’énergie solaire concentrée)

  excluded equipment

  excluded equipment means

  • (a) auxiliary heating or electrical generating equipment that uses any fossil fuel;

  • (b) buildings or structures other than those structures described in paragraph (i) of the definition of concentrated solar energy equipment;

  • (c) distribution equipment;

  • (d) property included in Class 10 in Schedule II to the Income Tax Regulations; and

  • (e) property that would be included in Class 17 in Schedule II to the Income Tax Regulations if that Class were read without reference to its paragraph (a.1). (matériel non admissible)

  government assistance

  government assistance has the meaning assigned by subsection 127(9). (aide gouvernementale)

  non-clean technology use

  non-clean technology use means a use of a particular property at a particular time that would, if the property were acquired at that time, result in the property ceasing to be a clean technology property, determined without reference to paragraph (b) of the definition clean technology property in this subsection. (utilisation non concernée par la technologie propre)

  non-government assistance

  non-government assistance has the meaning assigned by subsection 127(9). (aide non gouvernementale)

  qualifying taxpayer

  qualifying taxpayer means a taxable Canadian corporation or a mutual fund trust that is a real estate investment trust (as defined in subsection 122.1(1)). (contribuable admissible)

  small modular nuclear reactor

  small modular nuclear reactor means equipment that is used all or substantially all to generate electrical energy or heat energy, or a combination of electrical energy and heat energy, from nuclear fission — including reactors, reactor vessels, reactor control rods, moderators, cooling systems, control systems, nuclear fission fuel handling equipment, containment structures, electrical generating equipment and equipment for the distribution of heat energy — that

  • (a) is part of a system that has a gross rated generating capacity not exceeding 300 megawatts electric, or an energy balance equivalent gross rated generating capacity of electricity or heat equivalent of 1,000 megawatts thermal;

  • (b) is part of a system all or substantially all of which is comprised of modules that are factory-assembled and transported pre-built to the installation site; and

  • (c) is not

    • (i) nuclear fission fuel,

    • (ii) equipment for nuclear waste disposal and nuclear waste disposal sites,

    • (iii) transmission equipment,

    • (iv) distribution equipment,

    • (v) property included in Class 10 in Schedule II to the Income Tax Regulations, or

    • (vi) property that would be included in Class 17 in Schedule II to the Income Tax Regulations if that Class were read without reference to its paragraph (a.1). (petit réacteur modulaire nucléaire)

  specified percentage

  specified percentage means, in respect of a clean technology property of the taxpayer that is acquired

  • (a) before March 28, 2023, determined without reference to subsection (4), nil;

  • (b) on or after March 28, 2023 and before January 1, 2034, 30%;

  • (c) after December 31, 2033 and before January 1, 2035, 15%; and

  • (d) after December 31, 2034, nil. (pourcentage déterminé)

• Marginal note:Clean technology investment tax credit

  (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s clean technology investment tax credit for the year.

• Marginal note:Time limit for application

  (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the year.

• Marginal note:Time of acquisition

  (4) For the purpose of this section, clean technology property is deemed not to have been acquired by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

• Marginal note:Special rules — adjustments

  (5) For the purpose of the definition clean technology investment tax credit in subsection (1), the capital cost of clean technology property shall

  • (a) not include any amount in respect of a capital property

    • (i) for which an amount was previously deducted under this section by any person,

    • (ii) in respect of which a CCUS tax credit was deducted under section 127.44 by any person, or

    • (iii) that has, by virtue of section 21, been added to the cost of a property;

  • (b) be determined without reference to subsections 13(7.1) and (7.4), less the amount of any government assistance or non-government assistance that can reasonably be considered to be in respect of the property and that, at the time of the filing of the taxpayer’s return of income under this Part for the taxation year in which the property was acquired by the taxpayer or partnership, the taxpayer or partnership has received, is entitled to receive or can reasonably be expected to receive; and

  • (c) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

    • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.45,

    • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.45(9), and

    • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of a clean technology property.

• Marginal note:Deemed deduction

  (6) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21) and subsection 53(2), the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• Marginal note:Repayment of assistance

  (7) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the cost of a property under paragraph (5)(b) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s clean technology investment tax credit for the year.

• Marginal note:Partnerships

  (8) Subject to section 127.47, where, in a particular taxation year of a taxpayer who is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a taxable Canadian corporation and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the clean technology investment tax credit of the taxpayer at the end of the particular year.

• Marginal note:Unpaid amounts

  (9) For the purposes of this section, where any part of the capital cost of a taxpayer’s clean technology property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a clean technology investment tax credit would otherwise be available in respect of the property, such amount is to be

  • (a) excluded from the capital cost of such property in the year; and

  • (b) added to the capital cost of such property at the time it is paid.

• Marginal note:Tax shelter investment

  (10) Subsection (2) does not apply if a clean technology property — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property — is a tax shelter investment for the purpose of section 143.2.

• Marginal note:Recapture — conditions for application

  (11) Subsection (12) applies in a taxation year if

  • (a) a taxpayer acquired a clean technology property in the year or any of the preceding 10 calendar years;

  • (b) the taxpayer became entitled to a clean technology investment tax credit in respect of the capital cost, or a portion of the capital cost, of the particular property; and

  • (c) in the year, the particular property (or another property that incorporates the particular property) is converted to a non-clean technology use, is exported from Canada or is disposed of without having been previously exported or converted to a non-clean technology use.

• Marginal note:Recapture of credit

  (12) If this subsection applies, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of

  • (a) the amount of the taxpayer’s clean technology investment tax credit in respect of the particular property, and

  • (b) the amount determined by the formula

    A × (B ÷ C)

    where

    A

    is the amount of the taxpayer’s clean technology investment tax credit in respect of the particular property,

    B

    is

    • (i) in the case where the particular property is disposed of to a person who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, or

    • (ii) in the case where the particular property is disposed of to a person who does not deal at arm’s length with the taxpayer, is converted to a non-clean technology use or is exported from Canada, the fair market value of the property, and

    C

    is the capital cost of the particular property on which the clean technology investment tax credit was deducted.

• Marginal note:Certain non-arm’s length transfers

  (13) Subsections (11) and (12) do not apply to a taxpayer that is a taxable Canadian corporation (in this subsection referred to as the “transferor”) that disposes of a property to another taxable Canadian corporation (in this subsection referred to as the “purchaser”) related to the transferor if the purchaser acquired the property in circumstances where the property would be clean technology property to the purchaser but for paragraph (b) of that definition.

• Marginal note:Certain non-arm’s length transfers — recapture deferred

  (14) If subsection (13) applies, subsection 127(34) applies with such modifications as the circumstances require, including that the reference to subsection 127(33) be read as a reference to subsection 127.45(13).

• Marginal note:Recapture event reporting requirement

  (15) If subsection (11) or (13) applies to a taxpayer for a particular year, the taxpayer shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year.

• Marginal note:Recapture of credit for partnerships

  (16) Subsection (17) applies in a fiscal period of a partnership if

  • (a) the partnership acquired a particular clean technology property in the fiscal period or in any of the 10 preceding calendar years;

  • (b) the cost, or a portion of the cost, of the particular property is included in an amount, a percentage of which can reasonably be considered to have been included in computing the amount determined under subsection (8) in respect of the partnership at the end of a fiscal period; and

  • (c) in the fiscal period, the particular property (or another property that incorporates the particular property) is converted to a non-clean technology use, is exported from Canada or is disposed of without having been previously exported or converted to a non-clean technology use.

• Marginal note:Addition to tax

  (17) If this subsection applies to a fiscal period of a partnership, where a taxpayer is a member of the partnership during the fiscal period, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which the fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, equal to the lesser of

  • (a) the amount that can reasonably be considered to have been included in respect of the particular property in computing the amount determined under subsection (8) in respect of the partnership, and

  • (b) the percentage described in paragraph (16)(b) of

    • (i) where the particular property (or the other property) is disposed of to a person who deals at arm’s length with the partnership, the proceeds of disposition of the property, and

    • (ii) in any other case, the fair market value of the particular property (or the other property) at the time of the conversion, export or disposition.

• Marginal note:Information return — partnerships

  (18) If subsections (16) and (17) apply with respect to the property of a partnership for a particular fiscal period, the partnership shall notify the Minister in prescribed form and manner on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period.

• Marginal note:Clean technology investment tax credit — purpose

  (19) The purpose of this section is to encourage the investment of capital in the adoption and operation of clean technology property in Canada.

• Marginal note:Authority of the Minister of Natural Resources

  (20) For the purpose of determining whether a property is a clean technology property, any technical guide, published by the Department of Natural Resources and as amended from time to time, is to apply conclusively with respect to engineering and scientific matters.