What may happen to the Clean Economy ITCs?

We're happy to kick off 2025 with some thoughts about ITCs and what may or may not happen. Read on if you're curious.

TLDR: We believe that passed ITCs are not at risk but the likelihood that new ones will be passed is low.

The recent developments in Canadian politics which occurred before and after the Fall Economic Statement, including the resignation of Deputy Prime Minister and Finance Minister Chrystia Freeland and the NDP removing their support to the Liberal government, have increased the likelihood of a federal election in the coming months. Amid this uncertainty, you may be wondering about the future of the Clean Economy Investment Tax Credits (ITCs).

What may happen to the Clean Economy ITCs:

• For the enacted Clean Economy ITCs:

  • The Carbon Capture, Utilization, and Storage, the Clean Technology, the Clean Hydrogen, and the Clean Technology Manufacturing ITCs have already been enacted

  • Considering the numerous steps required to amend the Income Tax Act and the range of pressing issues competing for attention, it is unlikely that changes to the ITCs will occur in the upcoming parliamentary sessions.

• For the Clean Economy ITCs that are not yet enacted:

  • The Clean Electricity ITC (available to certain taxable and non-taxable corporations, including corporations owned by municipalities or Indigenous communities, and pension investment corporations, as well as provincial and territorial Crown corporation) and the biomass expansion of the Clean Technology ITC have not yet been enacted

  • These ITCs are likely to face significant delays, if they are enacted at all, as parties may prioritize a range of other issues. For context, the first wave of Clean Economy ITCs, which were a priority for the current Liberal government, took approximately seven months to receive Royal Assent.

As we closely monitor developments in the federal government, the CRA is currently reviewing the initial Clean Economy ITC claims for 2023, with 2024 claims set to follow soon.

Please keep in mind that putting in place robust processes to collect, validate and catalogue data evidencing compliance will go a long way in protecting your ITC claim and accelerating the assessment by the CRA.

If you’d like to chat about the ITCs, please don’t hesitate to reach out or book time with us