How to Apply to the Clean Technology Manufacturing (CTM) Investment Tax Credit

The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) is a Canadian federal refundable investment tax credit designed to accelerate capital investment in clean technology manufacturing and processing, and in critical mineral extraction and processing. For eligible property acquired on or after January 1, 2024 and available for use by December 31, 2034, organizations can claim a significant refundable credit through their corporate income tax return.

Administered by the Canada Revenue Agency (CRA), the CTM ITC is claimed on the T2 corporate return. Applications are completed by filing the required schedules and supporting calculations, then responding to any information requests as part of CRA’s review, audit, and compliance processes.

This guide explains the full CTM ITC application process: what it funds, who qualifies, required documents, how to complete Schedule 76 and Schedule 31, claiming timelines, and practical tips to improve accuracy and speed.

Overview of the Clean Technology Manufacturing (CTM) Investment Tax Credit

The CTM ITC supports capital investment across the clean technology supply chain. It applies to prescribed “eligible property” used primarily in:

• Manufacturing and processing of clean technology components and equipment

• Extraction and processing of critical minerals in Canada

Key parameters:

• Program window: Property must be acquired on or after January 1, 2024 and become available for use by December 31, 2034.

• Refundable credit: The CTM ITC is refundable, meaning you may receive a refund even if you owe no tax.

• Rate schedule:

• 30% for property that becomes available for use in 2024–2031

• 20% in 2032

• 10% in 2033

• 5% in 2034

• Administration: The CRA manages claims, processes refunds, and conducts audit and compliance activities.

If your organization is investing in clean technology manufacturing equipment or critical mineral extraction/processing assets in Canada, the CTM ITC can materially reduce net capital costs through a refundable tax credit.

Eligibility Requirements

To claim the CTM ITC, ensure you meet both applicant and property eligibility. Use this checklist to self-assess:

• Applicant eligibility

• You are a taxable Canadian corporation filing a T2 return for the taxation year in which the eligible property becomes available for use.

• If you are a member of a partnership, your corporation is allocated its share of the CTM ITC based on the partnership information slip and supporting allocations. Individual partners cannot claim the CTM ITC personally; claims flow to taxable corporate partners via their T2.

• You are compliant with CRA filing and payment obligations, or you can address any outstanding issues as part of the filing process.

• Property eligibility

• The asset is “eligible property” prescribed for the CTM ITC and is located in Canada.

• The asset is intended to be used primarily (more than 50%) in eligible activities, such as:

• Manufacturing or processing clean technology components and equipment (for example, battery materials and components, solar or wind components, energy storage systems, advanced clean-tech materials).

• Extracting or processing critical minerals used in clean technology supply chains (for example, lithium, nickel, cobalt, graphite processing equipment).

• The property is acquired on or after January 1, 2024 and becomes available for use by December 31, 2034.

• The property is capital in nature and can be tracked in your capital asset sub-ledger and CCA classes.

• Timing and filing

• The claim is filed with the T2 return for the taxation year in which the property becomes available for use.

• In most cases, late, amended, or adjusted claims are possible within one year after the T2 filing due date for that year.

• Other support and stacking

• You have tracked all government assistance and other tax credits received for the same property. Assistance that reduces the cost of the property will reduce the CTM ITC base. Double-claiming the same cost under multiple clean economy ITCs is not permitted.

Because definitions and asset lists can be technical, many organizations consult tax or engineering teams to confirm that specific machinery or processing equipment meets the “eligible property” criteria and that intended use is primarily in qualifying activities.

Required Documents

Prepare a complete and well-organized package. CRA may request supporting documentation during assessment or audit. Keep records for each asset claimed:

• Corporate and tax records

• T2 return for the taxation year and financial statements

• Schedule 76 (CTM ITC calculation) working papers

• Schedule 31 (Investment tax credits) entries and carryforward/claim selections

• Partnership information slips and allocations (if applicable, including T5013 data)

• Continuity of ITC balances, if any, and any carryback/carryforward evidence

• Property documentation

• Purchase agreements, invoices, and proof of payment

• Asset descriptions linking equipment to eligible clean technology manufacturing or critical mineral activities

• Serial numbers, commissioning reports, and “available for use” documentation

• Location of the property in Canada and site details

• Depreciable property classification (CCA class) and capital asset sub-ledger entries

• For building additions or fit-outs, breakout of costs to isolate eligible equipment and exclude ineligible items (e.g., general building costs)

• Installation, commissioning, and integration records showing the asset’s function in the production process

• Use and activity evidence

• Process flow diagrams and layout drawings showing the role of the equipment in eligible manufacturing or processing

• Production logs or capacity documentation supporting primary use in eligible activities

• For mixed-use assets, reasonable allocation methodology and calculations demonstrating >50% eligible use

• Other assistance and adjustments

• Documentation of grants, subsidies, or other tax credits that reduce the cost base

• Internal calculations reconciling eligible cost base to the CTM ITC claimed

• Governance and attestations

• Internal approval memos and board approvals for the capital project

• Policies and controls for asset capitalization and classification

• Any environmental or operating permits related to the eligible activities (if relevant)

Accuracy and traceability are critical. Ensure each claimed asset can be tied to invoices, payments, commissioning, and eligible use.

Step-by-Step Application Process

The CTM ITC is claimed on your corporate tax return. Follow these steps to file a complete and well-supported claim.

Step 1: Confirm eligibility and define the asset list

• Map your capital project and isolate assets that appear to be “eligible property.”

• Confirm that each asset:

• Is acquired on or after January 1, 2024

• Is located in Canada

• Is used primarily in eligible manufacturing/processing or critical mineral activities

• Becomes available for use during the taxation year

• Create an asset register for CTM ITC, including descriptions, costs, dates, and intended use.

Step 2: Compile supporting documentation

• Collect invoices, contracts, and proof of payment.

• Gather commissioning certificates or internal commissioning memos to substantiate the “available for use” date.

• For mixed-use assets, prepare allocation memos and calculations.

• Reconcile project budgets to actuals and ensure costs tie to the general ledger and capital sub-ledger.

Step 3: Calculate the CTM ITC per asset (Schedule 76 basis)

• Determine the eligible cost base for each property, net of assistance or credits that reduce cost.

• Apply the correct CTM ITC rate based on the year the property becomes available for use:

• 30% in 2024–2031

• 20% in 2032

• 10% in 2033

• 5% in 2034

• Aggregate the credit by asset and in total for the year.

• Document all assumptions and methodologies used.

Step 4: Complete Schedule 76 (Clean Technology Manufacturing ITC)

• Enter asset-level or aggregated amounts for eligible property and compute the CTM ITC for the year.

• Include any flow-through amounts received as a corporate partner from a partnership allocation.

• Retain the detailed working papers used to populate Schedule 76.

Step 5: Complete Schedule 31 (Investment Tax Credit)

• Report the CTM ITC amount from Schedule 76 on Schedule 31. The CTM ITC entry is typically captured on the designated line for current-year ITCs; many filers reference line 170 for total current-year ITCs before applying available carryforwards or transfers.

• Indicate claim choices, such as refund vs. carryforward, as applicable for your situation.

• Reconcile Schedule 31 to your overall tax position and financial statement presentation.

Step 6: File your T2 return by the due date

• File the T2 corporate return for the taxation year in which the property became available for use, with Schedule 76 and Schedule 31 completed.

• The T2 due date is generally six months after your year-end. The CTM ITC claim is typically accepted on a timely original return or an adjustment filed within one year after the T2 due date.

Step 7: Respond to CRA review or requests

• CRA may issue a query or request for information. Respond promptly with:

• Asset lists and descriptions

• Invoices and proof of payment

• Commissioning documents and available-for-use evidence

• Process narratives and diagrams substantiating eligible use

• Allocation methodologies for mixed-use assets

• Maintain a clear audit trail so CRA can trace every amount to source records.

Step 8: Receive assessment and refund (if applicable)

• Once assessed, CRA will apply the refundable credit against your account and issue a refund for any excess, subject to set-offs.

• Retain all records in case of a post-assessment audit or review.

Application Timeline

• When to claim: Claim the CTM ITC on the T2 return covering the year the property becomes available for use.

• Filing deadline: The T2 is generally due six months after year-end. In most cases, you can make or adjust a CTM ITC claim up to one year after the T2 due date for that year.

• Processing time: Refundable investment tax credit processing varies. Many claims take several weeks to a few months, depending on complexity, completeness, and CRA workload.

• Seasonal considerations: Large volumes of returns near common year-ends (e.g., December 31) can extend processing times. Plan documents and responses early.

Always verify current due-date and adjustment rules for your specific return and taxation year.

Tips for a Successful Application

• Build a dedicated CTM ITC asset register: Include cost, date acquired, available-for-use date, location, eligible activity, and support references.

• Link every claimed dollar to source: Ensure invoices, payments, and commissioning records reconcile to the ledger and to Schedule 76.

• Write a clear process narrative: A short description of where each asset fits into your clean technology manufacturing or critical mineral processing flow reduces review friction.

• Separate eligible from ineligible costs: Isolate general building costs, indirect costs, or office equipment that is typically ineligible.

• Track other assistance: Document all grants and credits that reduce the cost base so the CTM ITC is calculated on the correct net amount.

• Address mixed use: If an asset has mixed applications, prepare a reasonable methodology demonstrating primary eligible use and apply it consistently.

• Prepare for questions: Assemble a response package in advance to accelerate CRA reviews.

Common Mistakes to Avoid

• Claiming before “available for use”: The CTM ITC is claimed in the year the property becomes available for use, not when ordered or delivered.

• Insufficient documentation: Missing invoices, commissioning evidence, or payment proofs can delay or reduce your claim.

• Over-claiming mixed-use assets: Without a reasonable, documented allocation, CRA may deny a portion of the credit.

• Double-counting costs: Ensure the same costs are not claimed under multiple clean economy ITCs and are reduced for any government assistance.

• Misclassifying property: Confirm that equipment is truly eligible property used primarily in qualifying activities.

• Missing the adjustment window: Monitor due dates; if you must amend, do so within the allowed time frame, typically one year after the T2 due date.

What Happens After You Apply

• Initial assessment: CRA reviews your T2, Schedule 76, and Schedule 31 for completeness and consistency.

• Information requests: CRA may request backup documentation. Respond within deadlines to keep processing on track.

• Refund and set-off: The CTM ITC is refundable. If the credit exceeds taxes payable, CRA issues a refund, subject to any set-offs against other balances.

• Post-assessment review or audit: CRA may conduct detailed reviews after assessment. Keep records for all claimed assets.

• Changes in use or disposition: Be aware of recapture rules. If eligible property is disposed of or its use changes within specified periods, a portion of the credit may be repayable or adjusted in a later year.

• Amendments: If you discover an error, you can request an adjustment to the return and ITC claim, subject to time limits.

Conclusion

Claiming the Clean Technology Manufacturing (CTM) Investment Tax Credit is a structured, document-driven process completed through your T2 corporate return. By confirming eligibility, preparing clear asset-level documentation, accurately completing Schedule 76 and Schedule 31, and responding promptly to CRA requests, organizations can efficiently access a refundable credit of up to 30% in 2024–2031 (phasing to 20% in 2032, 10% in 2033, and 5% in 2034). Plan ahead, keep a strong audit trail, and file on time to maximize the benefit of this Canadian clean economy incentive.