Who Can Apply to the Clean Technology (CT) Investment Tax Credit (ITC)
The Clean Technology Investment Tax Credit (CT ITC) is a federal refundable tax credit designed to accelerate investment in eligible clean technology property across Canada. It provides up to 30% of the capital cost for qualifying assets that become available for use from March 28, 2023, through December 31, 2033, and up to 15% for property available for use in 2034. Understanding who can apply—and under what conditions—is essential before planning a project or making capital commitments.
This article explains the CT ITC eligibility rules in detail: which organizations qualify, how partnerships and REITs participate, restrictions linked to property use in Canada, leasing conditions, interactions with other clean economy ITCs, and the labour requirements election that affects the credit rate. It provides a self-assessment checklist so your team can quickly determine whether to proceed.
As of the date of publication, the rules below reflect current program guidance. Final eligibility depends on your exact facts and proper filing with the Canada Revenue Agency (CRA), with technical guidance on property categories supported by Natural Resources Canada (NRCan).
Program Overview
The Clean Technology ITC is a refundable investment tax credit that supports capital expenditures on specified clean technology property in Canada. Key program elements include:
Credit rate: up to 30% for property available for use from March 28, 2023, to December 31, 2033; up to 15% in 2034; unavailable after 2034.
Labour requirements: if you do not elect to meet prevailing wage and apprenticeship requirements, the credit rate is reduced by 10 percentage points (30% to 20%; 15% to 5%). Covered work is work performed on or after November 28, 2023.
Eligible property categories include, among others: equipment to generate electricity from solar, wind, and water; stationary electricity storage (non‑fossil); active solar heating; air‑source and ground‑source heat pumps; non‑road zero‑emission vehicles (ZEVs) and related charging/refuelling equipment; geothermal (not tied to fossil extraction); concentrated solar; and small modular nuclear reactors (SMRs).
Administration: CRA administers the tax credit and claim process; NRCan provides engineering and scientific guidance on whether property fits an eligible category.
While this piece focuses on applicant eligibility, note that property-level conditions also apply, including that eligible equipment must be situated in and intended for use exclusively in Canada and must be new (not previously used or acquired for use or lease).
Applicant Type Requirements
To claim the CT ITC, you must be one of the following:
A taxable Canadian corporation. This includes a taxable Canadian corporation that is a member of a partnership.
A mutual fund trust that is a real estate investment trust (MFT‑REIT). This includes an MFT‑REIT that is a member of a partnership.
Important clarifications:
Taxable Canadian corporation status is a tax concept. Both Canadian‑controlled private corporations (CCPCs) and other taxable Canadian corporations can be eligible, provided they meet the program conditions and acquire eligible property that becomes available for use within the prescribed timeframe.
Trust eligibility for the CT ITC is limited to MFT‑REITs. Other types of trusts generally cannot claim the CT ITC.
Partnerships themselves do not claim the CT ITC as a final claimant; they calculate and allocate amounts to members who are eligible entities (e.g., taxable Canadian corporations or MFT‑REITs). Members then claim based on their allocated share.
Foreign ownership does not automatically disqualify an applicant. A Canadian subsidiary that is a taxable Canadian corporation can generally qualify if all other program conditions are met.
If you are uncertain about your taxpayer status, seek tax advice before proceeding. The CRA will expect your filing to match the correct entity type and to reflect accurate calculations and allocations.
Size & Scale Criteria
The CT ITC does not set explicit size thresholds based on:
Number of employees,
Annual revenue, or
Total assets.
This means small businesses, SMEs, large corporations, and qualifying REITs can all be eligible. In practice, eligibility is driven by:
The taxpayer’s status (taxable Canadian corporation or MFT‑REIT),
The nature of the project and property, and
Compliance with Canada‑use, “new property,” labour requirements (if elected), and other technical rules.
Lenders, utilities, manufacturers, mining operators, commercial real estate owners, energy storage developers, and logistics/warehousing organizations may all qualify if they meet the conditions above and invest in eligible equipment.
Geographic Eligibility
To qualify for the Clean Technology ITC, property must:
Be situated in Canada; and
Be intended for use exclusively in Canada.
This Canada‑use requirement is critical. Property used partly outside Canada generally fails the “exclusively in Canada” condition. Ensure deployment, operation, and intended use are in Canada for the entire relevant period.
Additional notes:
If property is subsequently exported from Canada within the recapture period, a recapture of the credit may be required. This is addressed at the claim/review stage, but it’s important to plan for Canada‑only use from the outset.
Provincial or municipal location within Canada does not change federal eligibility. Organizations in Ontario, Québec, British Columbia, Alberta, the Prairies, Atlantic Canada, and the Territories can all potentially claim, provided the property is situated and intended for use exclusively in Canada and all other rules are met.
Project & Activity Requirements
Eligibility is primarily tied to investing in eligible clean technology property. Typical project contexts include:
Renewable electricity generation (solar PV, wind, run‑of‑river, small hydro),
Stationary electricity storage (battery energy storage systems, pumped hydro) that do not use fossil fuels in operation,
Thermal systems (active solar heating, air‑source and ground‑source heat pumps) including commercial and industrial applications,
Non‑road ZEV fleets and the associated charging or hydrogen refuelling hardware used primarily for such vehicles (e.g., in mining, industrial yards, ports, airports),
Geothermal energy projects generating electricity and/or heat solely from geothermal energy, not part of any fossil extraction system,
Concentrated solar power equipment,
Small modular nuclear reactors.
Remember:
Property must be new—neither previously used nor previously acquired for use or lease.
Property must become available for use within the eligible window to receive the corresponding rate.
The program focuses on capital property; operating expenses and training costs are not the focus of this ITC.
This article is not a full property‑eligibility guide. NRCan issues technical guidance on whether equipment fits a CT category. When planning, build your scope around the categories above and maintain documentation showing the equipment’s specification, commissioning, and “available for use” date.
Financial & Operational Criteria
While the CT ITC does not prescribe specific financial ratios or creditworthiness tests, successful claimants will typically demonstrate:
Tax compliance: filing the correct return type (T2 for corporations; T3 for trusts), completing required schedules/forms, and meeting filing due dates.
Evidence of capital cost and commissioning: invoices, contracts, progress draws, delivery notes, commissioning certificates, and records establishing the “available for use” date.
Labour requirements compliance if you elect in: policies or contracts demonstrating prevailing wage and apprenticeship adherence for covered work on or after November 28, 2023. If you elect to meet the labour requirements but fail to comply, additional tax may be assessed and the regular rate may be denied or adjusted.
Accurate allocation and reporting: for partnerships, ensuring calculations, T5013 slips, and allocations (including labour additions, recapture amounts, and ITC shares) are consistent and timely.
Be aware of recapture rules. If within the recapture period the property is disposed of, exported, or converted to a non‑clean technology use, part or all of the previously claimed credit may need to be repaid, up to the original CT ITC amount associated with that property.
Ineligible Applicants
You are generally not eligible to claim the CT ITC if you are:
A tax‑exempt entity (e.g., most non‑profit organizations, registered charities, municipalities, Crown corporations) that is not a taxable Canadian corporation or an MFT‑REIT,
A trust other than an MFT‑REIT,
An individual, sole proprietorship, or ordinary partnership with no eligible taxable Canadian corporation or MFT‑REIT members.
If your organization is tax‑exempt but pursuing clean energy projects, note that other federal clean economy ITCs (such as the Clean Electricity ITC) may have different claimant rules. Those are separate programs with their own eligibility frameworks.
Special Cases & Exceptions
The CT ITC rules are detailed. The following scenarios arise frequently:
Canadian subsidiaries of foreign groups: A Canadian subsidiary that is a taxable Canadian corporation can generally claim if the investment and property meet all CT ITC requirements. Foreign ownership alone does not disqualify the claim.
Partnerships and joint ventures: A partnership calculates the CT ITC and allocates it to eligible members (taxable Canadian corporations or MFT‑REITs), typically via T5013 slips. The members then claim on their own returns. Ensure the partnership agreement and records support allocations.
Leasing models: If you lease eligible property to another party, additional conditions must be met:
The lessee must be a taxable Canadian corporation, an MFT‑REIT, or a partnership all of whose members are taxable Canadian corporations.
The leasing must occur in the ordinary course of the lessor’s Canadian business, where the lessor’s principal business is leasing, lending, or selling/servicing property of that type, or financing such sales via conditional sales contracts and similar instruments.
Ensure you document that the property is new, situated in Canada, intended for use exclusively in Canada, and otherwise meets CT property requirements.
Power purchase and third‑party ownership models: If your business model involves a third party owning and operating the equipment while you purchase the output (e.g., PPA structures), determine who is the taxpayer acquiring the property, whether leasing rules apply, and how Canada‑use and availability‑for‑use are satisfied.
Intercompany transfers: Where related parties are involved, ensure the acquiring claimant meets the “new property” condition (not previously used or acquired for use or lease). Transfers that undermine “newness” or availability‑for‑use timing can jeopardize the claim.
Canada‑only use complications: Cross‑border or remote operations near the Canada‑U.S. border, mobile non‑road assets transported outside Canada, or assets destined for export can create risk. Build controls to maintain exclusive use in Canada.
Sector examples and edge cases:
Mining fleets: Non‑road ZEV trucks and associated chargers used primarily for those vehicles can qualify if all conditions are met.
Commercial real estate: REITs implementing rooftop solar, BESS, or heat pumps may qualify as MFT‑REIT claimants, provided property and Canada‑use criteria are met.
SMRs and geothermal: Specialized projects should document technical eligibility thoroughly and confirm property categorization per NRCan guidance.
Interactions with Other Credits and Stacking Rules
No double‑claim on the same property: You generally cannot claim more than one clean economy ITC on the same piece of property. For example, you cannot claim both the CT ITC and the Carbon Capture, Utilization, and Storage (CCUS) ITC for the same property.
Multiple ITCs within one project: You may claim multiple clean economy ITCs within a single project if the project contains different types of eligible property, each mapped to its appropriate ITC.
Atlantic investment tax credit: You can claim both the CT ITC and the Atlantic investment tax credit where applicable. Coordinate calculations to avoid conflicts and ensure proper reporting.
Class 43.1/43.2 incentives: Separate tax incentives may apply to eligible property, such as accelerated capital cost allowance (ACCA). These incentives interact with, but are distinct from, the CT ITC.
Labour Requirements Election and Credit Rate
Your credit rate depends on whether you elect to meet the labour requirements for covered workers for work performed on or after November 28, 2023:
If you elect and comply: up to 30% for property available for use from March 28, 2023, to December 31, 2033; up to 15% in 2034.
If you do not elect: rate is reduced by 10 percentage points (up to 20% through 2033; up to 5% in 2034).
If you elect but do not comply: expect financial consequences and potential adjustments on assessment.
The labour election does not determine “who can apply,” but it directly affects the rate available to eligible applicants. Incorporate labour compliance planning early—especially for construction and installation phases.
Self-Assessment Checklist
Use this quick checklist to gauge eligibility before detailed planning:
Entity status
Are you a taxable Canadian corporation? Or an MFT‑REIT? If in a partnership, are you (or all members) an eligible claimant type?
Property basics
Is the property new (not previously used or acquired for use or lease)?
Will the property be situated in and intended for use exclusively in Canada?
Does the property fit a CT category (e.g., solar/wind/water generation; non‑fossil stationary storage; active solar heating; air/ground‑source heat pumps; non‑road ZEVs and chargers; geothermal excluding fossil extraction systems; concentrated solar; SMRs)?
Timing
Will the property become available for use between March 28, 2023, and December 31, 2034? Do you understand the rate change in 2034?
Leasing and business models
If leasing out the property, do you meet the additional leasing conditions (eligible lessee; ordinary course; appropriate principal business activities)?
If using a PPA/third‑party ownership model, have you identified the correct claimant and ensured Canada‑use?
Interactions and stacking
Are you avoiding double‑claiming other clean economy ITCs on the same property?
Are you coordinating with the Atlantic investment tax credit if applicable?
Labour election
Will you elect into labour requirements to avoid the reduced rate? Do you have a plan to document prevailing wages and apprenticeships for covered work?
Documentation and filing
Can you substantiate capital costs and “available for use” dates?
If in a partnership, have you planned allocations and T5013 reporting?
Are you prepared to file with the appropriate schedules/forms and meet due dates?
If you answered “yes” to most questions, you likely fit the CT ITC eligibility framework. Proceed to confirm property categorization, capital cost basis, and filing requirements.
Conclusion
Eligibility for the Clean Technology Investment Tax Credit centres on the claimant’s status (taxable Canadian corporation or MFT‑REIT), exclusive Canada‑use of new qualifying property, and adherence to program rules on timing, interactions with other ITCs, and—if elected—labour requirements. Partnerships can participate through allocations to eligible members, and leasing models may qualify if additional conditions are met. Because the CT ITC offers a significant refundable tax credit through 2034, confirm eligibility early, align your corporate or trust structure with the rules, and establish documentation to support Canada‑use, “available for use,” and labour compliance where applicable. This disciplined approach helps organizations across Canada confidently assess whether they can apply for the Clean Technology ITC and plan investment timelines accordingly.
