A proposed new federal tax credit would provide a rebate on air filtration improvements for qualifying small businesses making investments between September 1, 2021 and December 31, 2022. Finance Minister Chrystia Freeland has announced plans for the 25 per cent rebate, to a maximum of $10,000 per upgrade or installation, as part of the government’s Economic and Fiscal Update.
As outlined, the refundable tax credit would apply on stand-alone equipment that employs high-efficiency particulate air (HEPA) filters to improve air quality or for specified HVAC investments. In the latter case, newly installed HVAC systems must either outperform a MERV 8 rating for air filtration or deliver MERV 8 equivalency in combination with the outdoor air supply exceeding the minimum building code requirements. The tax credit would also be available for retrofits of existing HVAC systems to bring them up to MERV 8 air filtration capability.
Unincorporated sole proprietors and Canadian controlled private corporations with less than $15 million of taxable capital in the previous tax year would be eligible, and could potentially obtain rebates on expenditures in multiple commercial locations to a maximum total of $50,000. The Economic and Fiscal Update proposes a total budget of $241 million for the tax credit, with the bulk of that funding to be expended in the 2022-23 budget year.
“As Omicron has reminded us, COVID-19 threatens us still,” Freeland observes. “As 2021 draws to a close, finishing the fight against COVID-19 remains our most important national project.”
Toward that end, healthy building champions commend the government’s focus on indoor air quality, but acknowledge that ventilation enhancements can represent a significant financial commitment. Bala Gnanam, vice president, sustainability, advocacy and stakeholder relations, with the Building Owners and Managers Association (BOMA) of Canada, notes that Canadian small businesses are now carrying an average debt of more than $170,000.
“Paying 75 per cent of the cost of implementing measures to improve air quality could be a further burden on business owners who have already been hit hard by the pandemic,” he says. “Another approach would have been to offer them the same amount of tax credit without a 25 per cent threshold, but with requirements for proof that appropriate equipment has been purchased and installed by a licensed service provider.”
The Economic and Fiscal Update also promises some top-ups to existing funds for improving ventilation in schools and community buildings. That includes an additional $100 million to be allocated to the provinces and territories through the Safe Return to Class fund, plus $10 million to First Nations for on-reserve schools. Beginning in budget year 2022-23, $70 million over three years will be allocated for ventilation improvements in public buildings such as health care facilities, libraries and community centres, with the major share of spending slated for 2023-24.
