Who Can Apply to the Clean Technology Manufacturing (CTM) Investment Tax Credit
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) is a federal refundable tax credit designed to accelerate capital investment in Canada’s clean technology manufacturing and processing, as well as critical mineral extraction and processing. Claimed through the Canada Revenue Agency (CRA), it applies to eligible property acquired on or after January 1, 2024 that becomes available for use by December 31, 2034. As of today’s date, the CTM ITC rate schedule is 30% for 2024–2031, 20% in 2032, 10% in 2033, and 5% in 2034.
This article explains who can apply to the CTM ITC, the types of organizations and projects that qualify, and the boundaries that typically make an applicant ineligible. It provides a practical self-assessment you can use to determine whether your organization should proceed to a detailed claim review.
Program Overview
The Clean Technology Manufacturing Investment Tax Credit is a refundable investment tax credit administered by CRA. It supports capital investments in Canada that directly enable:
Manufacturing and processing of clean technology components and equipment.
Extraction and processing of critical minerals used in clean technology value chains.
High-level program parameters include:
Time window: Eligible property acquired on or after January 1, 2024 and available for use by December 31, 2034.
Rates: 30% (2024–2031), 20% (2032), 10% (2033), 5% (2034).
Claiming method: Filed on the corporate T2 return, with CTM ITC calculations and entries typically reported using Schedule 76 and Schedule 31.
Administration: CRA manages claims, reviews, and compliance.
Understanding eligibility is essential before you invest time in detailed calculations and documentation. The sections below outline applicant eligibility, scale and geography considerations, project and activity requirements, and common ineligibility scenarios.
Applicant Type Requirements
In most cases, eligibility to claim the CTM ITC is tied to corporate filers under the Income Tax Act.
Eligible applicant types typically include:
Taxable Canadian corporations that acquire and use eligible property in Canada for qualifying clean technology manufacturing/processing or critical mineral activities.
Members of partnerships that are taxable Canadian corporations, to the extent of their share of eligible partnership expenditures and property, as reported through partnership information returns.
Key considerations by entity type:
Taxable Canadian corporation: The primary claimant type for the CTM ITC. Corporations file a T2 corporate tax return and can claim refundable credits even in low-tax or no-tax years, subject to program rules.
Canadian-controlled private corporation (CCPC) vs. other corporations: The CTM ITC is not restricted only to CCPCs. Public corporations and other taxable corporations may qualify if they meet property and activity requirements.
Partnerships: Partnerships themselves generally do not claim corporate tax credits directly; rather, eligible amounts are allocated to partners. Corporate partners that are taxable in Canada may claim their share, depending on their status and the partnership’s activities.
Amalgamations and wind-ups: Successor corporations may, in certain circumstances, succeed to property and credit positions of predecessor entities. Treatment is technical and should be verified at the time of filing.
Trusts and individuals: The CTM ITC is a corporate tax credit; individuals and most trusts are not claimants on a T2 return.
Tax-exempt entities: Organizations that are tax-exempt and do not file a T2 return as a taxable corporation are typically not eligible to claim the CTM ITC.
Always verify the corporate status of the claimant and ensure the entity is the acquirer and user of the eligible property in Canada.
Size & Scale Criteria
The CTM ITC does not impose explicit size thresholds for applicants. Both small and large organizations may be eligible if they meet the property and activity requirements.
Practical size-related considerations:
Small businesses and SMEs: Can qualify if they are taxable Canadian corporations and acquire eligible equipment for eligible activities. Documentation and cost segregation should be proportional and organized.
Large enterprises and public companies: May also qualify if they invest in eligible property for qualifying activities and file the required schedules with the T2 return.
Startups and growth-stage manufacturers: Eligibility depends on corporate status (taxable corporation), the location and nature of activities, and whether the acquired property meets the program’s eligible property definition.
Because the CTM ITC is capital-focused, scale often relates to the amount and type of property acquired rather than employee count or revenue.
Geographic Eligibility
The CTM ITC is a Canadian federal incentive. Geographic factors include:
Property must be situated in Canada and used in Canada for eligible manufacturing/processing or critical mineral activities.
Applicants can be located in any province or territory, including Ontario, Quebec, British Columbia, Alberta, Manitoba, Saskatchewan, the Atlantic provinces, and the northern territories.
Cross-border organizations: Multinational groups may claim through their taxable Canadian corporation(s) for eligible Canadian-located property used in Canada. Property located or used outside Canada is generally not eligible.
Regional economic development considerations do not restrict CTM ITC access; however, provincial programs may be stackable subject to federal and provincial rules. Applicants must monitor stacking impacts on net support and potential interactions with other incentives.
Project & Activity Requirements
Eligibility hinges on acquiring and using “eligible property” for qualifying activities in Canada. While specifics are technical, the following requirements are core:
Qualifying activities (examples):
Manufacturing or processing of clean technology components and equipment.
Critical mineral extraction (e.g., mining) and processing activities that feed clean technology supply chains.
Eligible property themes:
Machinery and equipment used primarily in Canada for the eligible manufacturing/processing of clean technology components. For example, equipment used to produce battery materials, solar or wind components, energy storage parts, or other clean technology supply chain elements.
Equipment used in Canada for the extraction or processing of critical minerals that are integral to clean technology manufacturing.
Timing and use:
Property must be acquired on or after January 1, 2024.
Property must become available for use by December 31, 2034.
The property should be used in Canada for the qualifying activities, and usage must be supportable through records and operational evidence.
What to avoid:
Property principally used for non-qualifying activities.
Property located or used outside of Canada.
Assets that fail to meet the CRA’s definition of eligible property for the CTM ITC.
Because “eligible property” has a precise definition in CRA guidance, applicants should match each asset to the program’s criteria and maintain evidence of use in qualifying activities.
Financial & Operational Criteria
To qualify and successfully claim the CTM ITC, applicants generally need to demonstrate the following:
Corporate tax status: You are a taxable Canadian corporation that files a T2 return.
Accurate asset classification: Each asset claimed meets the program’s eligible property definition and is clearly identified in your fixed asset register.
Available-for-use date: You can substantiate when the property became available for use in Canada.
Canadian use: You can demonstrate that the property is used in Canada for eligible manufacturing, processing, extraction, or processing activities related to clean technology supply chains.
Books and records: Invoices, contracts, shipping and installation documentation, commissioning records, and usage logs are retained and organized.
Compliance standing: You are generally compliant with CRA requirements (e.g., tax filings, remittances), which supports a smoother review.
Note that claims are refundable and may be reviewed or audited by CRA. Strong documentation and consistent tax positions across schedules help reduce review delays.
Ineligible Applicants
The following are typically ineligible to claim the CTM ITC:
Individuals and sole proprietorships that do not file a T2 corporate return.
Partnerships as entities (partnership members may claim depending on their status; see special cases).
Tax-exempt organizations that are not taxable Canadian corporations.
Non-resident entities with no taxable Canadian corporation carrying on business in Canada and acquiring/using the eligible property in Canada.
Corporations that acquire assets that do not meet the eligible property definition, or that primarily use the assets for non-qualifying activities or outside Canada.
Ineligibility may also arise when claimed assets fall outside the program period, are not available for use by the deadline, or lack sufficient documentation to prove eligibility.
Special Cases & Exceptions
Certain structures and events require careful handling:
Partnerships: A partnership may undertake eligible activities and acquire eligible property. The partnership allocates relevant information to partners. Taxable Canadian corporate partners can generally claim their share through their T2 filing, using partnership information returns and supporting documentation.
Amalgamations and wind-ups: Successor corporations may continue to claim with respect to eligible property acquired by predecessor entities, subject to the continuity rules of the Income Tax Act. Keep detailed legal and accounting records to support continuity.
Foreign-owned Canadian corporations: If the Canadian entity is a taxable corporation and the property and activities meet the CTM ITC criteria, ownership by a foreign parent does not necessarily preclude eligibility. The key is the Canadian corporate taxpayer status and Canadian-location use of eligible property.
Project changes: If property use changes, is moved out of Canada, or is disposed of, recapture or other adjustments may apply after you claim. Monitor asset life-cycle events carefully and maintain change logs.
Provincial alignment: Federal CTM ITC eligibility is independent of provincial incentives, but stacking rules and combined support levels should be assessed to ensure compliance across programs.
Because these cases can be nuanced, align tax, legal, and operational documentation early in the project.
Self-Assessment Checklist
Use this quick checklist to gauge whether you can apply for the CTM ITC:
Corporate status:
Are you a taxable Canadian corporation that files a T2 return?
If operating through a partnership, are you a taxable Canadian corporate partner receiving an allocation?
Activity fit:
Do your operations involve manufacturing or processing clean technology components in Canada?
Do your operations involve extraction or processing of critical minerals in Canada for clean tech value chains?
Property fit:
Is each claimed asset “eligible property” used primarily in Canada for qualifying activities?
Was the property acquired on/after January 1, 2024 and available for use by December 31, 2034?
Location:
Is the property located and used in Canada?
Documentation:
Do you have invoices, contracts, installation and commissioning records, and usage evidence?
Is your fixed asset register updated with available-for-use dates and locations?
Filing readiness:
Can you complete the CTM ITC calculation and enter the amount on the T2 with the appropriate schedules (including Schedule 76 and Schedule 31)?
For partnerships, do you have complete partnership information to support allocations?
If you answered “yes” to most of the above, you likely meet the core eligibility profile and can move forward to detailed calculation and claim preparation.
Conclusion
The Clean Technology Manufacturing Investment Tax Credit is accessible to a wide range of Canadian corporations that invest in eligible manufacturing/processing and critical mineral activities. Eligibility ultimately hinges on three pillars: being a taxable Canadian corporation (or a corporate partner), acquiring eligible property within the 2024–2034 window, and using that property in Canada for qualifying activities. With rates of 30% in 2024–2031, stepping down through 2034, the CTM ITC can materially improve project economics. As program details can be technical and subject to review, ensure your corporate status, property definitions, dates, and records are clear and consistent before filing.
