Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC)
Canada
Incentivize Canadian companies to invest in clean technology
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Mining, quarrying, and oil and gas extraction
- Manufacturing
grant_single|grantors
- Canada Revenue Agency (CRA)
grant_single|status
grant_card_status|open
grant_single_labels|preview
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) is a refundable tax credit aimed at encouraging capital investment in clean technology manufacturing, processing, and critical mineral extraction and processing in Canada from January 1, 2024, to December 31, 2034. Eligible activities include manufacturing and processing that utilize specific machinery and equipment, as well as the extraction and processing of critical minerals. The credit covers 30% of capital costs for qualifying assets, with phased reductions starting in 2032.
grant_single_labels|projects
Eligible projects or activities under the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) include investments in capital assets for clean technology manufacturing and processing, as well as critical mineral extraction and processing.
- Manufacturing or processing of clean technology equipment such as industrial robots for electric vehicle production.
- Specialized machinery used for the extraction and processing of critical minerals such as copper and nickel.
- Industrial tools like molds for casting in foundries or cutting tools for solar cell manufacturing.
- Non-road electric vehicles and hydrogen-powered equipment used in manufacturing plants and mining operations.
grant_single_labels|admissibility
The grant provides support to eligible taxpayers who invest capital in acquiring clean technology manufacturing and processing assets used within approved activities, or for the extraction and processing of critical minerals in Canada. To be eligible, the assets must meet specific criteria related to their use, location, and acquisition conditions.
- Must be a Canadian tax-paying corporation (including Canadian tax-paying corporations that are members of a partnership).
- Assets must be new FTP property acquired from January 1, 2024, and ready for use by December 31, 2034.
- Assets must be located and intended to be used exclusively in Canada.
- Assets must not have been used, or intended to be used or leased, for any other purpose before acquisition by the taxpayer.
- If the asset is leased to another entity, it must be leased to a Canadian tax-paying corporation or a partnership where all members are Canadian tax-paying corporations.
- The leasing must occur in the normal business activities of the corporation, focusing on either the sale, maintenance, or rental of such assets, or activities related to financing and trade receivables.
- The asset must be used almost entirely (90% or more) for qualifying manufacturing or processing activities or in qualifying mineral production activities yielding eligible materials.
grant_eligibility_criteria|who_can_apply
Yes, there are eligible types of companies for the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC). To be eligible, the companies must be Canadian tax-paying corporations or partnerships where all members are Canadian tax-paying corporations.
- Canadian tax-paying corporations
- Partnerships where all members are Canadian tax-paying corporations
grant_eligibility_criteria|eligible_expenses
Yes, there are eligible expenses for this grant. These expenses generally include costs associated with the acquisition of certain clean technology manufacturing or processing assets and critical mineral extraction or processing equipment.
- Legal, accounting, and engineering fees for acquiring the asset
- Costs for site preparation, delivery, installation, testing, and commissioning
- Materials, labor, and overhead costs directly attributable to self-manufactured assets
grant_eligibility_criteria|zone
The grant is applicable to eligible properties located and intended to be used exclusively in Canada, with no prior use or acquisition for other purposes before being acquired by the taxpayer. Specific geographic zones are not listed, so eligibility appears to be nationwide.
- Properties must be located in Canada
- Properties must be intended for exclusive use in Canada
grant_single_labels|register
- Step 1: Determine Eligibility
- The company must be a Canadian tax-paying corporation, including members of a partnership where all members are Canadian tax-paying corporations.
- Ensure the property in question meets specific criteria, such as being located and used exclusively in Canada and falling into eligible categories like manufacturing equipment or mineral extraction tools.
- Step 2: Calculate the Capital Cost
- Include the total cost of acquiring the property and additional costs like legal, accounting, site preparation, delivery, and installation expenses.
- Deduct any government or non-government assistance received or expected to be received.
- Step 3: Calculate the Credit Amount
- The Clean Technology Manufacturing Investment Tax Credit (CTM ITC) rate is generally 30% of the capital cost of eligible properties.
- The rate reduces to 20% in 2032, 10% in 2033, and 5% in 2034.
- Step 4: Prepare Supporting Documentation
- Gather necessary documents, including invoices, receipts, and records of all costs included in the capital cost.
- Prepare statements showing the use of the property exclusively in Canada and for eligible activities.
- Step 5: File Corporate Income Tax Return
- Submit the calculated CTM ITC amount on your corporate income tax return following the guidelines by the Canada Revenue Agency (CRA).
- Include all necessary documents and attachments as required by the CRA.
- Step 6: Compliance and Audits
- Maintain records for compliance and potential audits by the CRA.
- Be prepared to provide additional information if requested by the CRA to validate the claim.
grant_single_labels|otherInfo
This grant encourages capital investment in clean technology manufacturing, processing, and critical mineral extraction in Canada. It provides a refundable tax credit for eligible activities from January 1, 2024, to December 31, 2034.
- The CTM ITC is administered by the Canada Revenue Agency (CRA).
- Changes to provisions may take effect retroactively as per proposed legislative changes.
- Companies cannot claim multiple Clean Economy ITCs for the same property but can for different properties within a project.
- The tax credit percentage decreases over the years: 30% until 2032, 20% in 2032, 10% in 2033, and 5% in 2034.
- Eligible taxpayers include Canadian corporations and members of partnerships which are Canadian taxable corporations.
- No workforce requirements currently apply to this tax credit.
- Eligible goods must be used exclusively in Canada and cannot be previously used or intended for any other purpose before the acquisition.
- Specific depreciation categories apply, including machinery, equipment, non-road vehicles, and specialized tools.
- If leased, certain rental terms and tenant eligibility requirements must be met.
- The capital cost of properties includes all costs incurred to get the property ready for use, less any government or non-government assistance received.
- Unpaid portions of capital costs as of 180 days after the fiscal year-end must be excluded from the capital costs but can be added back upon payment.
Apply to this program
Overview of the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC)
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) provides a refundable tax credit to support Canadian businesses investing in clean technology manufacturing, processing, and critical mineral extraction activities. This incentive, running from January 1, 2024, to December 31, 2034, is designed to promote sustainable industrial growth and innovation in Canada.
A Comprehensive Guide to the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC)
The global push towards sustainability has paved the way for innovative financial instruments designed to encourage businesses to invest in clean technologies. One such instrument is the Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) in Canada. As a refundable tax credit, it aims to significantly promote the development and adoption of cleaner technologies within the country. Whether you are a business owner, an investor, or a stakeholder in the clean technology sector, understanding the dynamics of this tax credit can be a game-changer for your strategic planning.
What is the CTM ITC?
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) is a refundable tax credit introduced by the Canadian federal government to foster investment in clean technology manufacturing, processing, and critical mineral extraction and processing. This initiative is particularly significant as it aligns with Canada's commitment to reducing carbon emissions and enhancing sustainable industrial practices. The CTM ITC is managed by the Canada Revenue Agency (CRA) and applies to eligible activities conducted between January 1, 2024, and December 31, 2034.
Key Features of the CTM ITC
Eligibility
To qualify for the CTM ITC, entities must meet several criteria. Primarily, the tax credit is available to Canadian corporations subject to federal income tax, including those that are members of a partnership. It's crucial to note that this tax credit is designed for new capital investment in eligible clean technology assets.
Applicable Assets
Eligible assets under the CTM ITC include new clean technology manufacturing and processing equipment. Specifically, these assets should be: - Located and intended for exclusive use within Canada. - New, meaning they have not been previously used or acquired for any other purpose before being obtained by the taxpayer. - Subject to additional leasing requirements if they are leased to another person or partnership. Eligible assets generally fall into the following categories: - Machinery and equipment used for manufacturing or processing, such as industrial robots for electric vehicle manufacturing or vessels for processing cathode-active materials. - Certain tangible properties related to buildings and structures used in manufacturing or processing or required for machinery or equipment, such as ventilation systems for chemical fumes or specialized electrical wiring for panel manufacturing. - Equipment used for the extraction and processing of critical minerals like copper and nickel. - Specialized tooling, such as molds for casting copper ingots or cutting tools for solar cell manufacturing. - Certain off-road vehicles and automotive equipment, including electric and hydrogen-powered vehicles designed for factory or mining use.
Ineligible Claims
While the CTM ITC offers generous benefits, it's essential to understand the limitations. Generally, you can claim only one type of Clean Economy ITC for the same asset. For instance, you cannot claim the CTM ITC if you have already claimed the Carbon Capture, Utilization, and Storage (CCUS) ITC or the Clean Hydrogen ITC for the same asset. However, you can claim multiple ITCs for different assets within the same project, provided they meet the eligibility criteria.
Application Process
To claim the CTM ITC, businesses must apply through their corporate income tax return. The application requires detailed information about the eligible assets, their capital costs, and their intended use. Specific instructions and calculation tools are provided by the CRA to assist in accurately determining the tax credit amount.
Calculation of the Tax Credit
The tax credit rate is set at 30% of the capital cost for eligible assets associated with qualifying activities. This rate will decrease progressively to 20% in 2032, 10% in 2033, and 5% in 2034. Notably, if any government or non-governmental assistance is received for the acquisition of the asset, this amount must be deducted from the capital cost before calculating the CTM ITC.
Labour Requirements
Currently, there are no specific labour requirements associated with the CTM ITC, making it relatively accessible for businesses of all sizes without additional labour-related compliance hurdles.
The Strategic Benefits of the CTM ITC
The financial benefits of the CTM ITC are substantial, offering a significant reduction in the overall cost of investing in clean technology. By providing a refundable tax credit, the CTM ITC directly supports businesses' cash flow and can be particularly advantageous for companies in the early stages of integrating new technologies. Strategically, businesses can leverage the CTM ITC to improve their competitive edge. Investing in clean technologies not only aligns with global sustainability goals but also enhances operational efficiencies, reduces long-term costs, and positions companies as leaders in a rapidly evolving market. Furthermore, this tax credit can stimulate innovation and drive the development of new, cutting-edge technologies that are critical to maintaining Canada's position on the global stage.
Examples of Eligible Projects
Understanding practical applications can elucidate the potential impact of the CTM ITC. Here are a few examples: - A manufacturing facility investing in state-of-the-art robots to assemble electric vehicles would qualify for the CTM ITC, helping to offset the substantial upfront costs associated with these advanced technologies. - A mining operation acquiring new equipment for the extraction and processing of critical minerals like lithium or cobalt can benefit from the tax credit, aligning their operations with the growing demand for materials critical to the renewable energy sector. - A company involved in the construction of factories implementing specialized ventilation systems to control hazardous emissions can claim the CTM ITC, thus supporting cleaner and safer workplace environments.
Considerations for Businesses
Before applying for the CTM ITC, businesses should conduct a thorough analysis to ensure all eligibility requirements are met. It is advisable to consult with tax professionals or specialists in government grants to navigate the complexities of the application process effectively. Additionally, companies should consider the long-term strategic implications of their investments in clean technology, weighing the immediate financial benefits of the tax credit against the broader operational and market advantages.
Conclusion
The Clean Technology Manufacturing (CTM) Investment Tax Credit (ITC) represents a pivotal tool for Canadian businesses committed to advancing sustainability and clean technology. By offering a substantial financial incentive, the federal government aims to catalyze investment in innovative technologies that will drive economic growth and environmental stewardship. For businesses poised to lead in this arena, the CTM ITC is not just a tax benefit but a strategic asset that can propel them towards a sustainable and competitive future.
