Clean Economy Tax Credits: State of the Union & Promises Made - Webinar Recording Released
Updates on Canada's Clean Economy Tax Credit Program
During a April 24th’s CleanTech North webinar we discussed the current state of affairs for the Clean Economy Tax Credits, offering insights for organizations pursuing same.
Several important aspects of the program were addressed by experts:
Martha Breithaupt, BDO
Jonathan Garbutt, Dominion Tax Law
Jeff Keats, EDC
These insights included:
Form Availability: While forms for the Clean Technology Tax Credit and Carbon Capture, Use, and Storage (CCUS) are now available, the forms for the Hydrogen and Clean Technology manufacturing tax credits are still pending. In the interim, the government has outlined a mechanism on the clean economy investment tax credit website for claiming these credits via Schedule 31 for the 2024 tax year, requiring the provision of additional information.
Critical Labor Requirements: The attestation paperwork for labor requirements is available. To qualify for the full 30% credit, organizations must elect and attest to meeting specific wage requirements aligned with Canada Building Trades Unionized rates for every job site. This includes communicating these requirements to workers and posting appropriate signage. It is important to note that the current attestation is largely a binary (yes/no) declaration, necessitating careful consideration of compliance across all aspects of a project.
Early Wins: It is noteworthy that the CRA has processed 25 claims specifically for the clean technology tax credit, indicating that refunds are commencing.
High Likelihood of Audit: The Canada Revenue Agency (CRA) has indicated a high likelihood of audits (potentially 100% initially) for these claims, managed by the SHRED directorate as part of their training process. The reported average audit duration is approximately 100 days.
Legislative Amendments Pending: Several proposed legislative amendments, such as those concerning poly metallic mining and biogas/biodigesters, are currently in abeyance due to the election cycle. The ratification of these amendments is anticipated post-election. Draft legislation or consultation phases are underway for the clean electricity tax credit and the EV supply chain ITC.
Given the anticipated scrutiny from the CRA, maintaining meticulous and comprehensive documentation is of paramount importance. This includes evidence pertaining to labor conditions, equipment eligibility, and signage. Organizations should ensure thorough record-keeping to demonstrate reasonable efforts toward compliance.
Stakeholders in the clean technology sector are encouraged to stay informed about further developments following the election and to consult with tax professionals for guidance in navigating these crucial tax credits.
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