The Canadian government has extended a small tax perk for businesses investing in 19 specified types of equipment used in renewable energy generation, energy storage or energy conserving systems. The newly released 2018 budget confirms that business taxpayers can claim an accelerated deduction of the capital cost of such assets until 2025. The program had been set to expire in 2020.
Eligible claimants can initially deduct 50 per cent of the capital cost of qualifying equipment purchased on or after February 22, 2005 from their business income, and then 50 per cent of the declining balance each year into the future. A 30 per cent capital cost allowance is also available for older equipment, purchased between February 21,1994 and February 21, 2005.
The budget document estimates that about 900 businesses will see benefits from the five-year extension, and anticipates approximately $123 million in lost tax revenue for the 2020-2023 period. “This represents, on average, an additional $27,000 annually over the next five years that these companies will be able to use to invest in and grow their operations while reducing their carbon footprint,” it states.
Qualifying equipment includes solar thermal and solar photovoltaic systems, heat pumps, heat recovery system, district energy systems and associated equipment. Electrical vehicle charging systems and electrical energy storage equipment acquired after March 21, 2016 are also eligible.