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Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction
Corporate tax reduction for Canadian manufacturing and zero-emission technology
Last Update: October 27, 2025
Funding available
Up to 13% of project cost
Timeline
- Open continuously
Location
Canada
Overview
The Manufacturing and Processing Profits Deduction and Zero-Emission Technology Manufacturing Deduction provide eligible Canadian corporations with significant tax reductions on manufacturing and processing income, including reduced tax rates as low as 4.5% for small businesses and 7.5% for other corporations engaged in qualified zero-emission technology manufacturing. This program supports activities such as manufacturing energy conversion equipment, air-source heat pumps, zero-emission vehicles, and certain nuclear energy components, aiming to incentivize clean technology and advanced manufacturing in Canada.
/100
Opportunity Score
Moderate potential, but conditions must align.
At a glance
Funding available
Financing goals
- Reduce environmental footprint
Eligible Funding
- Up to 13% of project cost
Timeline
- Open continuously
Eligible candidates
Eligible Industries
- Utilities
- Manufacturing
Location
- Canada
Legal structures
- For-profit business
Annual revenue
- $ 200,000 maximum revenue
Organisation size
- All organization sizes
Audience
- Canadians
Next Steps
1
Determine your project
2
Validate your eligibility
Activities funded
- Manufacturing or processing goods in Canada for sale or lease.
- Production of zero-emission technology, including energy conversion equipment such as solar, wind, water, and geothermal equipment.
- Manufacturing of air-source heat pumps used for space or water heating.
- Manufacturing activities related to zero-emission vehicles, including production of vehicles, batteries, and charging stations.
- Nuclear manufacturing and processing activities, including manufacturing of nuclear energy equipment, processing or recycling of nuclear fuels and heavy water, and manufacturing of nuclear fuel rods.
Eligibility
Who is eligible?
- Corporations involved in manufacturing or processing goods in Canada for sale or lease
- Corporations engaged in manufacturing of energy conversion equipment (e.g., solar, wind, water, and geothermal equipment)
- Corporations manufacturing air-source heat pumps for space or water heating
- Corporations involved in zero-emission vehicle manufacturing, including vehicle, battery, and charging station manufacturing
- Corporations conducting nuclear energy equipment manufacturing, nuclear fuel processing or recycling, or manufacturing of nuclear fuel rods (for tax years starting after 2023)
Who is not eligible
- Companies primarily engaged in farming, fishing, logging, or construction.
- Businesses involved in operating oil or gas wells or extracting petroleum or natural gas.
- Corporations extracting minerals or processing ore and producing industrial minerals.
- Companies carrying on any active business activities outside Canada during the year.
Eligible geographic areas
- Corporations operating in Canada
Additional information
- The manufacturing and processing profits deduction (MPPD) and zero-emission technology manufacturing deduction are both calculated using Schedule 27 of the tax return.
- Different methods are available for calculating eligible profits depending on the corporation’s size and type (small manufacturing corporations vs. others), as outlined in Schedule 27.
- The temporary reduced tax rates for zero-emission technology manufacturers will gradually be phased out from 2032 and completely ended for tax years beginning after 2034.
- Definitions of eligible manufacturing activities and exclusions are specifically set out in relevant subsections of the Income Tax Act (125.1(3) and 125.2(2)).
Frequently Asked Questions about the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction Program
Here are answers to the most common questions about the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction. This section explains what the program is, how much funding is available, eligibility requirements, application deadlines, and other important details to help you determine if this grant is right for your business.
What is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
The Manufacturing and Processing Profits Deduction and Zero-Emission Technology Manufacturing Deduction provide eligible Canadian corporations with significant tax reductions on manufacturing and processing income, including reduced tax rates as low as 4.5% for small businesses and 7.5% for other corporations engaged in qualified zero-emission technology manufacturing. This program supports activities such as manufacturing energy conversion equipment, air-source heat pumps, zero-emission vehicles, and certain nuclear energy components, aiming to incentivize clean technology and advanced manufacturing in Canada.
How much funding can be received?
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction Funds up to 13% of admissible expenses.
Who is eligible for the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program?
To be eligible for the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program, you must:
At least 10% of gross revenue must come from manufacturing or processing goods in Canada for sale or lease.
The business must be a corporation operating in Canada.
Zero-emission technology deduction applies to profits from eligible zero-emission activities.
What expenses are eligible under Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
Manufacturing or processing goods in Canada for sale or lease.
Production of zero-emission technology, including energy conversion equipment such as solar, wind, water, and geothermal equipment.
Manufacturing of air-source heat pumps used for space or water heating.
Manufacturing activities related to zero-emission vehicles, including production of vehicles, batteries, and charging stations.
Nuclear manufacturing and processing activities, including manufacturing of nuclear energy equipment, processing or recycling of nuclear fuels and heavy water, and manufacturing of nuclear fuel rods.
Where is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction available?
The Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program is available across Canada.
Is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction a grant, loan, or tax credit?
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction is a Tax Credits
Who are the financial supporters of the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction is funded by Government of Canada