Canadian corporations can qualify for a new provincial tax credit equivalent to 20 per cent of the capital costs of designated clean generation or energy-saving equipment to be deployed in Newfoundland and Labrador. The new credit, to a maximum of $1 million annually, was unveiled in Newfoundland and Labrador’s 2022 provincial budget last week, and will apply on capital purchases/property categorized as Class 43.1 or 43.2 in Canada’s Income Tax Act.

Eligible claimants can receive up to 40 per cent of the approved amount as a cash refund. The remainder can be put toward provincial taxes owing in the year the credit is awarded and/or carried forward to reduce tax payable in any of the next 20 years.

In her budget address, Finance Minister Siobhan Coady linked the new green tax credit to other efforts to reduce greenhouse gas (GHG) emissions and the province’s recently launched renewable energy plan. That’s focused on hydroelectric, on- and off-shore wind, tidal energy and biomass resources, and opportunities to export surplus supply.

“We are introducing a new green technology tax credit of 20 per cent to help businesses with specific capital costs in this area,” she advised.

However, the tax credit’s alignment with Class 43.1 and 43.2 property is also pertinent for commercial real estate operators. Those categories include ground-source and air-source heat pumps, active solar heating systems, solar photovoltaic systems, electrical energy storage systems and electric vehicle charging stations.