Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)

CTM use

CTM use means the use of a property all or substantially all in

• (a) activities described in paragraph (a) or (c) of the definition qualified zero emission technology manufacturing activities in section 5202 of the Income Tax Regulations;

• (b) activities described in paragraph (a) or (b) of the definition qualifying mineral activity if the property is used to produce primarily qualifying materials, determined based on the value of all commercial outputs in accordance with subsection (2.2); or

• (c) activities described in any of paragraphs (c) to (f) of the definition qualifying mineral activity if the property is used to produce all or substantially all qualifying materials, determined based on the value of all commercial outputs in accordance with subsection (2.2). (utilisation pour la FTP)

• (vii) is incorporated into another property described in any of subparagraphs (i) to (vi), as part of a refurbishment of the other property provided that on completion of the refurbishment the other property is still described in any of subparagraphs (i) to (vi). (bien de FTP)

• (g) antimony;

• (h) gallium;

• (i) germanium;

• (j) indium; and

• (k) scandium. (matériau admissible)

• (b) a specified mineral processing activity that is performed at a mine site or well site;

• (c) a specified mineral processing activity that is performed at a location other than a location described in paragraph (b);

• (d) a recycling activity that is

  • (i) sorting, disassembly or shredding of a recyclable material, or

  • (ii) a material processing activity substantially similar to a specified mineral processing activity;

• (e) a synthetic graphite activity that is

  • (i) performed during or after the graphitization stage, and

  • (ii) a material processing activity substantially similar to a specified mineral processing activity; or

• (f) spheronization of graphite or coating of spheronized graphite. (activité minière admissible)

• (b) subject to paragraph (a)

  • (i) after December 31, 2023 and before January 1, 2032, 30%,

  • (ii) after December 31, 2031 and before January 1, 2033, 20%,

  • (iii) after December 31, 2032 and before January 1, 2034, 10%, and

  • (iv) after December 31, 2033 and before January 1, 2035, 5%; and

• (c) after December 31, 2034, nil. (pourcentage déterminé)

independent engineer or geoscientist

independent engineer or geoscientist means an individual who

• (a) is a qualified professional engineer or professional geoscientist as defined in subsection 127(9); and

• (b) is at all times at arm’s length with, independent of, and not employed by, each taxpayer claiming a related CTM investment tax credit. (ingénieur ou géoscientifique indépendant)

refurbishment

refurbishment means significant alterations, renovations, improvements or additions to a property to substantially

• (a) extend its useful life;

• (b) increase its capacity; or

• (c) improve its efficiency. (remise en état)

safe harbour price

safe harbour price of a commercial output means the five-year historical average spot price, determined at the end of the taxation year of a taxpayer in which a CTM investment tax credit is deducted in respect of a CTM property, of that output calculated

• (a) using prices from a recognized commodities exchange; or

• (b) if prices referred to in paragraph (a) are not available in respect of the output, in accordance with normal and accepted commercial practices in the industry. (prix au titre de la règle d’exonération)

safe harbour price method

safe harbour price method, in respect of a CTM property of a taxpayer, means the determination, on an annual basis, of the value of all commercial outputs from the property based on

• (a) the safe harbour price of the expected commercial outputs from the property if the year for which the determination is made is prior to a year in which the property was used by the taxpayer in commercial production; and

• (b) the safe harbour price of the actual commercial outputs from the property in a year in which the property was used by the taxpayer in commercial production. (méthode de détermination du prix au titre de la règle d’exonération)

specified fair market value method

specified fair market value method, in respect of a CTM property, means the determination, on an annual basis, of the value of all the commercial outputs from the property based on

• (a) the fair market value, determined at the end of the relevant taxation year, of the expected commercial outputs from the property if the year for which the determination is made is prior to a year in which the property was used by the taxpayer in commercial production; and

• (b) the fair market value, determined at the end of the relevant taxation year, of the actual commercial outputs from the property in a year in which the property was used by the taxpayer in commercial production. (méthode de détermination de la juste valeur marchande déterminée)

specified mineral processing activity

specified mineral processing activity means a mineral processing activity (including crushing, grinding, milling, separation, sieving, screening, froth floatation, leaching, recrystallization, precipitation, drying, evaporation, heating, calcinating, roasting, smelting, casting of ingots, refining, purification, distillation, electrodeposition and surface roughening of electrodeposited foil) that occurs prior to or as part of a process intended to

• (a) increase the purity of at least one qualifying material; or

• (b) produce a material with non-trace amounts of a single qualifying material, and without non-trace amounts of any elements other than permitted elements. (activité de traitement des minéraux déterminée)

• Marginal note:Certification requirement

  (2.1) Notwithstanding subsection (2), a CTM investment tax credit in respect of property used, or to be used, by the taxpayer or by a partnership of which the taxpayer is a member, in any activity described in paragraph (a) or (b) of the definition qualifying mineral activity in subsection (1), is deemed to be nil unless a taxpayer files with the Minister, together with the form and information described in subsection (2), a certification by an independent engineer or geoscientist in respect of the taxpayer in the prescribed form attesting that the property is being used, or is to be used,

  • (a) at a particular mine site or well site of the taxpayer or of a partnership of which the taxpayer is a member, as the case may be; and

  • (b) in accordance with a plan that primarily targets qualifying materials, determined based on the value of all commercial outputs expected to be produced in accordance with subsection (2.2).

• Marginal note:Valuation of qualifying mineral activity outputs

  (2.2) In the prescribed form referred to in subsection (2) that is filed by a taxpayer for a taxation year, the taxpayer must elect, in respect of each CTM property of the taxpayer for which the taxpayer claims a CTM investment tax credit for that year, that the determination of the value of all commercial outputs from that property is to be based on either

  • (a) the specified fair market value method, or

  • (b) the safe harbour price method.

• Marginal note:Time limit for application

  (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister the prescribed form containing prescribed information referred to in subsection (2) in respect of the amount on or before the later of December 31, 2026 and the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment by the taxpayer is deemed to arise under that subsection until the prescribed form containing the prescribed information has been filed with the Minister.

• (a) not include any amount

  • (i) in respect of which an amount was previously deducted under this section by any person,

  • (ii) in respect of which any other clean economy tax credit (as defined in subsection 127.47(1)) was deducted by any person,

  • (ii.1) in respect of any part of the capital cost of a property if a CCUS tax credit (as defined in subsection 127.44(1)) or a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted by any person in respect of that property, or

• Marginal note:Deemed deduction

  (6) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21) and subsection 53(2) and sections 127.44, 127.45, 127.48, 127.491 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• Marginal note:Repayment of assistance

  (7) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the cost of a particular property under paragraph (5)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a separate CTM property that is deemed to be acquired in the particular year for the purposes of this section, provided that a transaction or event described in paragraph (11)(c) has not occurred in respect of the particular property.

• Marginal note:Unpaid amounts

  (9) For the purposes of this section, where any part of the capital cost of a taxpayer’s particular CTM property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a CTM investment tax credit would otherwise be available in respect of the particular property, such amount is to be

  • (a) excluded from the capital cost of the particular property in the year; and

  • (b) added to the capital cost of a separate CTM property that is deemed to be acquired at the time the amount is paid, provided that a transaction or event described in paragraph (11)(c) has not occurred in respect of the particular property.

• Marginal note:Election by member to pay tax

  (18.1) A qualifying taxpayer that is a member of a partnership during a fiscal period of the partnership may elect, in prescribed form and manner, to add to its tax payable under this Part for its taxation year that includes the end of the fiscal period the total amount of tax determined for that fiscal period because of subsections (16) and (17) in respect of the partnership.

• Marginal note:Joint and several, or solidary, liability

  (18.2) Each current or former member of a partnership is jointly and severally, or solidarily, liable for any portion of the amount of tax — determined because of subsections (16) and (17) in respect of the partnership for a fiscal period — that is not added to the tax payable

  • (a) of a qualifying taxpayer under subsection (17); or

  • (b) of a qualifying taxpayer because of subsection (18.1) and paid by the qualifying taxpayer by its filing-due date for its taxation year that includes the end of the fiscal period.

• Marginal note:Former member liability

  (18.3) If a particular taxpayer was, at the time that an amount is determined because of subsections (16) and (17) in respect of a property of the partnership for a taxation year, no longer a member of the partnership, the particular taxpayer’s liability for tax because of subsection (18.2) is limited to the total of all amounts each of which is an amount determined for the particular taxpayer under subsection (2) in respect of the property because of its membership in the partnership.

Marginal note:Definitions

• 127.491 (1) The following definitions apply in this section.

  actual emission intensity

  actual emission intensity means the emission intensity of a specified natural gas energy system of a qualifying entity, based on the actual carbon dioxide emissions from the production of electrical energy by the system. (intensité des émissions réelle)

  average actual emission intensity

  average actual emission intensity means, for the compliance period of a qualified natural gas energy system, the number determined by the formula

  ((A × B) + (C × D) + (E × F) + (G × H) + (I × J)) ÷ K

  where

  A

  is the actual emission intensity of the system for the first operating year of the compliance period;

  B

  is the quantity, in gigawatt hours, of electrical energy produced by the system in the first operating year of the compliance period;

  C

  is the actual emission intensity of the system for the second operating year of the compliance period;

  D

  is the quantity, in gigawatt hours, of electrical energy produced by the system in the second operating year of the compliance period;

  E

  is the actual emission intensity of the system for the third operating year of the compliance period;

  F

  is the quantity, in gigawatt hours, of electrical energy produced by the system in the third operating year of the compliance period;

  G

  is the actual emission intensity of the system for the fourth operating year of the compliance period;

  H

  is the quantity, in gigawatt hours, of electrical energy produced by the system in the fourth operating year of the compliance period;

  I

  is the actual emission intensity of the system for the fifth operating year of the compliance period;

  J

  is the quantity, in gigawatt hours, of electrical energy produced by the system in the fifth operating year of the compliance period; and

  K

  is the total quantity, in gigawatt hours, of electrical energy produced by the system during the compliance period. (intensité des émissions réelle moyenne)

  clean electricity investment tax credit

  clean electricity investment tax credit of a qualifying entity for a taxation year means the total of all amounts each of which is

  • (a) the specified percentage of the capital cost to the qualifying entity of clean electricity property that is acquired by the entity in the year; or

  • (b) an amount required by subsection (12) to be added in computing the entity’s clean electricity investment tax credit at the end of the year. (crédit d’impôt à l’investissement pour l’électricité propre)

  clean electricity property

  clean electricity property means property of a qualifying entity

  • (a) that is not part of a project the construction of which started before March 28, 2023 (and for this purpose, construction does not include obtaining permits or regulatory approval, conducting environmental assessments, community consultations or impact assessment studies or similar activities);

  • (b) that is situated in Canada (including property described in subparagraph (d)‍(v) or (xiv) of Class 43.‍1 in Schedule II to the Income Tax Regulations that is installed in the exclusive economic zone of Canada) and intended for use exclusively in Canada;

  • (c) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the entity;

  • (d) that, if it is to be leased by a qualifying entity to another person or partnership, is

    • (i) leased to a qualifying entity or a partnership all the members of which are qualifying entities, and

    • (ii) leased in the ordinary course of carrying on a business in Canada by the qualifying entity whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and

  • (e) that is

    • (i) property that would be described in subparagraph (d)(ii) of Class 43.1 in Schedule II to the Income Tax Regulations, if that subparagraph were read without reference to its clause (A),

    • (ii) described in subparagraph (d)(v), (vi) or (xiv) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding a test wind turbine (within the meaning assigned by subsection 1219(3) of the Income Tax Regulations),

    • (iii) concentrated solar energy equipment, as defined in subsection 127.45(1), that is part of a system used solely for the purpose of generating electrical energy, exclusively from concentrated sunlight,

    • (iv) nuclear energy property,

    • (v) equipment that

      • (A) is part of a system that

        • (I) exports more electrical energy than heat energy on a net basis, as determined on an annual basis, and

        • (II) does not extract fossil fuels for sale,

      • (B) is used exclusively for the purpose of generating electrical energy, or a combination of electrical energy and heat energy, solely from geothermal energy, and

      • (C) is described in subparagraph (d)(vii) of Class 43.1 in Schedule II to the Income Tax Regulations,

    • (vi) waste biomass electricity generation equipment, as defined in subsection 127.45(1), that is part of a system that exports more electrical energy than heat energy on a net basis, as determined on an annual basis,

    • (vii) described in subparagraph (d)(xviii) or (xix) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding equipment that uses any fossil fuel in operation,

    • (viii) qualified natural gas energy equipment,

    • (ix) qualified interprovincial transmission equipment, or

    • (x) incorporated into another property described in any of subparagraphs (i) to (ix), as part of a refurbishment of the other property provided that on completion of the refurbishment the other property is still described in any of subparagraphs (i) to (ix). (bien pour l’électricité propre)

  compliance period

  compliance period in respect of a specified natural gas energy system of a taxpayer, means the period beginning on the start-up date of the system and ending on the last day of the fifth operating year of the system. (période de conformité)

  dedicated geological storage

  dedicated geological storage has the same meaning as in subsection 127.44(1). (stockage géologique dédié)

  designated provincial Crown corporation

  designated provincial Crown corporation means a corporation

  • (a) not less than 90% of the shares (except directors’ qualifying shares) or of the capital of which is owned by one or more persons each of which is His Majesty in right of a province;

  • (b) that is Northwest Territories Power Corporation, Qulliq Energy Corporation or Yukon Energy Corporation; or

  • (c) all of the shares (except directors’ qualifying shares) or of the capital of which is owned by one or more persons each of which is a corporation described in paragraph (a) or (b). (société d’État provinciale désignée)

  emission intensity

  emission intensity in respect of a qualified natural gas energy system, means the tonnes of carbon dioxide emissions released into the atmosphere for each gigawatt hour of electrical energy produced as determined by the formula

  A ÷ B

  where

  A

  is the number determined by the formula

  C − D − E

  where

  C

  is the quantity of carbon dioxide emissions, expressed in tonnes, during an operating year, from the combustion of fuel in the system, as determined in a manner that is acceptable to the Minister of Natural Resources,

  D

  is the quantity of carbon dioxide emissions, expressed in tonnes, attributable to the production of useful thermal energy exported by the system, during the operating year, as determined in a manner that is acceptable to the Minister of Natural Resources, and

  E

  is the quantity of carbon dioxide captured from the system and stored in dedicated geological storage, expressed in tonnes, during the operating year, as determined in a manner that is acceptable to the Minister of Natural Resources; and

  B

  is the quantity of electrical energy produced by the system during the operating year, expressed in gigawatt hours, as determined in a manner that is acceptable to the Minister of Natural Resources. (intensité des émissions)

  government assistance

  government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

  ineligible use

  ineligible use means

  • (a) in respect of a property other than qualified natural gas energy equipment, use of the property at a time that would, if the property were acquired at that time, result in the property not being a clean electricity property, determined without reference to paragraph (c) of the definition clean electricity property; and

  • (b) in respect of a property that is qualified natural gas energy equipment,

    • (i) use of the property at a time that would, if the property were acquired at that time, result in the property not being a clean electricity property, determined without reference to subparagraph (a)(vi) of the definition qualified natural gas energy equipment and paragraph (c) of the definition clean electricity property, and

    • (ii) any use of the system described in paragraph (a) of the definition qualified natural gas energy equipment, if the actual emission intensity of the system in an operating year is greater than 65 tonnes of carbon dioxide per gigawatt hour of electrical energy, for an operating year that begins after the fifth operating year but before the twenty-first operating year of the system. (utilisation non admissible)

  non-government assistance

  non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

  nuclear energy property

  nuclear energy property means property that

  • (a) is part of a fixed location system that

    • (i) is used all or substantially all to generate electrical energy, or a combination of electrical energy and heat energy, from nuclear fission, as determined on an annual basis, and

    • (ii) exports more electrical energy than heat energy on a net basis, as determined on an annual basis;

  • (b) is

    • (i) a reactor,

    • (ii) a reactor vessel,

    • (iii) a reactor control rod,

    • (iv) a moderator,

    • (v) cooling equipment,

    • (vi) heat generating equipment,

    • (vii) nuclear fission fuel handling equipment,

    • (viii) a containment structure,

    • (ix) electrical generating equipment,

    • (x) equipment for the distribution of heat energy within the system, or

    • (xi) equipment that is physically and functionally integrated with property described in any of subparagraphs (i) to (x) and that is ancillary equipment (such as control equipment) used solely to support the functioning of property described in any of subparagraphs (i) to (x); and

  • (c) is not

    • (i) nuclear fission fuel,

    • (ii) property used in nuclear waste disposal or storage,

    • (iii) transmission equipment,

    • (iv) distribution equipment,

    • (v) a vehicle,

    • (vi) property that would be included in Class 17 in Schedule II to the Income Tax Regulations if that Class were read without reference to its paragraph (a.‍1),

    • (vii) equipment used to export heat energy from the system, or

    • (viii) a building or other structure. (bien pour l’énergie nucléaire)

  operating year

  operating year of a specified natural gas energy system, means each cumulative 365-day period, the first of which begins on the start-up date of a qualifying entity’s specified natural gas energy system, disregarding any period during which the system is not operating.‍ (année d’exploitation)

  preliminary work activity

  preliminary work activity has the same meaning as in subsection 127.45(1), except that the reference to “clean technology property” in paragraph (c) shall be read as “clean electricity property”. (travaux préliminaires)

  qualified interprovincial transmission equipment

  qualified interprovincial transmission equipment means property that is primarily used, as determined on an annual basis, to transmit or manage electrical energy that originates in, or is destined for, a province other than the province in which the property is located and

  • (a) that is

    • (i) equipment for the transmission of electrical energy, including cables and switches, that is rated for voltages of at least 69 kilovolts,

    • (ii) electrical transmission structures, including towers and lattices, or

    • (iii) related equipment used to manage electrical energy, including transformers, electric power conditioning equipment and control equipment, that is directly connected to equipment described in subparagraph (i) or (ii); and

  • (b) that is not a building or distribution equipment. (matériel de transmission interprovinciale admissible)

  qualified natural gas energy equipment

  qualified natural gas energy equipment means property

  • (a) that is part of a system that meets the following conditions:

    • (i) the system

      • (A) is fuelled all or substantially all by the combustion of natural gas, as determined on an annual basis, and

      • (B) is not fuelled by anything other than the combustion of gaseous fuels,

    • (ii) the system is used solely for the purpose of generating electrical energy, or a combination of electrical energy and heat energy, determined without reference to capturing carbon dioxide,

    • (iii) the system exports more electrical energy than heat energy on a net basis as determined on an annual basis,

    • (iv) the system is physically and functionally integrated with equipment that captures and prepares or compresses carbon dioxide for transportation,

    • (v) less than 50% of the gross electrical energy generated by the system is used to power the equipment referred to in subparagraph (iv) as determined on an annual basis,

    • (vi) the system is not expected to exceed an emission intensity of 65 tonnes of carbon dioxide per gigawatt hour of gross electrical energy generated, and

    • (vii) a system evaluation has been issued for the system by the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources;

  • (b) that is

    • (i) electrical generating equipment,

    • (ii) heat generating equipment used primarily for the purpose of producing heat energy to operate the electrical generating equipment described in subparagraph (i),

    • (iii) equipment that generates both electrical and heat energy,

    • (iv) equipment that is to be used solely

      • (A) for capturing carbon dioxide that is generated by the system, or

      • (B) to prepare or compress for transportation carbon dioxide captured from the system,

    • (v) heat recovery equipment used primarily for the purpose of conserving energy, or reducing the requirement to acquire energy, by extracting for reuse thermal waste that is generated by equipment referred to in any of subparagraphs (i) to (iv) or (vi),

    • (vi) equipment for the distribution of heat energy within the system,

    • (vii) equipment that is physically and functionally integrated with equipment described in any of subparagraphs (i) to (vi) and that is ancillary equipment (such as control equipment) used solely to support the functioning of equipment described in any of those subparagraphs, or

    • (viii) described in any of subparagraphs (i) to (vii) that is incorporated into a system that would not otherwise be described in paragraph (a) if the incorporation causes the system to satisfy the description in paragraph (a);

  • (c) in the case of equipment that is acquired before the start-up date of the system referred to in paragraph (a), that is verified by the Minister of Natural Resources as being equipment described in paragraph (b); and

  • (d) that is not

    • (i) a building or other structure,

    • (ii) transmission equipment,

    • (iii) distribution equipment,

    • (iv) equipment used to export heat energy from the system,

    • (v) fuel storage or fuel handling equipment, or

    • (vi) pollution abatement equipment. (matériel d’énergie alimenté au gaz naturel admissible)

  qualified natural gas energy system

  qualified natural gas energy system means a system that is described in paragraph (a) of the definition qualified natural gas energy equipment. (système énergétique alimenté au gaz naturel admissible)

  qualified validation firm

  qualified validation firm, in respect of a specified natural gas energy system of a taxpayer, means an engineer or engineering firm that

  • (a) is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

    • (i) the jurisdiction where the system is located, or

    • (ii) if there is no professional association in the jurisdiction described in subparagraph (i), a jurisdiction in Canada where a professional association regulates the profession of engineering;

  • (b) has appropriate insurance coverage;

  • (c) at all times, is independent of, deals at arm’s length with and is not an employee of the taxpayer; and

  • (d) meets the requirements described in guidelines published by the Minister of Natural Resources. (firme admissible de validation)

  qualified verification firm

  qualified verification firm, in respect of a specified natural gas energy system of a taxpayer, means an individual or firm that

  • (a) is either

    • (i) an engineer or an engineering firm that is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

      • (A) the jurisdiction where the system is located, or

      • (B) if there is no professional association in the jurisdiction described in clause (A), a jurisdiction in Canada where a professional association regulates the profession of engineering, or

    • (ii) a verification body accredited and in good standing under the Clean Fuel Regulations;

  • (b) has appropriate insurance coverage;

  • (c) at all times, is independent of, deals at arm’s length with and is not an employee of

    • (i) the taxpayer, or

    • (ii) the qualified validation firm in respect of the system;

  • (d) meets the requirements described in guidelines published by the Minister of Natural Resources; and

  • (e) has expertise in auditing natural gas systems to demonstrate compliance with the Regulations Limiting Carbon Dioxide Emissions from Natural Gas-fired Generation of Electricity. (firme admissible de vérification)

  qualifying corporation

  qualifying corporation means

  • (a) a taxable Canadian corporation;

  • (b) a designated provincial Crown corporation;

  • (c) a corporation described in paragraph 149(1)(d.5) not less than 90% of the shares or the capital of which are owned by one or more entities each of which is

    • (i) a municipality in Canada, or

    • (ii) an aboriginal government (as defined in subsection 241(10)) — or a similar Indigenous governing body — described in paragraph 149(1)(c);

  • (d) a corporation described in paragraph 149(1)(d.6) all of the shares (except directors’ qualifying shares) or the capital of which are owned by one or more of

    • (i) a municipality in Canada,

    • (ii) an aboriginal government (as defined in subsection 241(10)) — or a similar Indigenous governing body — described in paragraph 149(1)(c), or

    • (iii) a corporation described in paragraph 149(1)(d.5);

  • (e) a corporation all of the shares (except directors’ qualifying shares) or of the capital of which are owned by one or more municipalities in Canada in combination with one or more persons each of which is described in the definition designated provincial Crown corporation; or

  • (f) a corporation to which paragraph 149(1)(o.2) applies. (société admissible)

  qualifying entity

  qualifying entity means a qualifying corporation or a qualifying trust. (entité admissible)

  qualifying trust

  qualifying trust means, at all relevant times, a trust

  • (a) each beneficiary of which is a corporation described in paragraph 149(1)(o.2);

  • (b) that is a limited partner of a partnership; and

  • (c) the sole undertaking of which is the holding of its interest in the partnership together with any ancillary activities. (fiducie admissible)

  refurbishment

  refurbishment means significant alterations, renovations, improvements or additions to a property to substantially

  • (a) extend its useful life;

  • (b) increase its capacity; or

  • (c) improve its efficiency. (remise en état)

  specified natural gas energy system

  specified natural gas energy system means a system that is, or was at any time, a qualified natural gas energy system. (système énergétique alimenté au gaz naturel déterminé)

  specified percentage

  specified percentage means, in respect of a clean electricity property of a qualifying entity that is acquired

  • (a) before April 16, 2024, determined without reference to subsection (7), nil;

  • (b) subject to paragraph (a), on or after April 16, 2024 and before January 1, 2035, 15%; and

  • (c) after December 31, 2034, nil. (pourcentage déterminé)

  start-up date

  start-up date of a specified natural gas energy system means the first day on which the system generates electrical energy for sale. (jour du début du projet)

  system plan

  system plan means a plan for a qualified natural gas energy system of a qualifying entity that

  • (a) has been prepared by a qualified validation firm;

  • (b) includes a front-end engineering design study (or an equivalent study as determined by the Minister of Natural Resources) for the system;

  • (c) sets out

    • (i) an expected emission intensity of the electrical energy to be produced by the system that is below 65 tonnes carbon dioxide per gigawatt hour,

    • (ii) an expected ratio of net electrical energy to net heat energy exported that is above 1, and

    • (iii) an expected ratio of electrical energy used to power equipment that captures and prepares or compresses carbon dioxide to gross electrical energy produced that is below 0.5;

  • (d) contains any information required in guidelines published by the Minister of Natural Resources; and

  • (e) is filed by the entity with the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources. (plan du système)

• Marginal note:Clean electricity investment tax credit

  (2) If a qualifying entity files a prescribed form containing prescribed information with the Minister on or before its filing-due date for its taxation year,

  • (a) in the case of an entity that is a taxable Canadian corporation or a qualifying trust, the entity is deemed to have paid on its balance-due day for the year an amount on account of the entity’s tax payable under this Part for the year equal to the entity’s clean electricity investment tax credit for the year; and

  • (b) subject to subsection (3), in the case of an entity that is described in any of paragraphs (b) to (f) of the definition qualifying corporation in subsection (1), the Minister shall, with all due dispatch, pay to the entity an amount equal to its clean electricity investment tax credit for the year.

• Marginal note:Section 149 entities

  (3) Subsection (2) does not apply to an entity that is described in any of paragraphs (b) to (f) of the definition qualifying corporation in subsection (1) unless the entity agrees in writing with the Minister to be subject to the provisions of this Act in respect of the entity’s clean electricity investment tax credit, with any modifications to those provisions that the circumstances require.

• Marginal note:Interpretive rule — nuclear energy property

  (4) For the purpose of this section, where a qualifying entity has a leasehold interest in a nuclear energy property

  • (a) subject to subsection (7), the entity is deemed to acquire the property when it acquires the leasehold interest in the property;

  • (b) the capital cost of the leasehold interest in the property to the entity is deemed to be its capital cost of the property; and

  • (c) the property is deemed to be disposed of by the entity when it ceases to hold the leasehold interest in the property for proceeds of disposition equal to the fair market value of the property at the time it ceases to hold the leasehold interest.

• Marginal note:Amount payable

  (5) Any amount payable by a qualifying entity under this section is deemed to be payable as a tax or as a payment in lieu of tax, as the case may be.

• Marginal note:Time limit for application

  (6) If the qualifying entity files with the Minister the prescribed form containing prescribed information referred to in subsection (2) after its filing-due date for the year but on or before the later of the day that is one year after that date and December 31, 2026, subsection (2) applies to the entity except that no payment is deemed to arise under that subsection until the prescribed form containing prescribed information has been filed with the Minister.

• Marginal note:Time of acquisition

  (7) For the purpose of this section, clean electricity property is deemed not to have been acquired by a qualifying entity before the property is considered to have become available for use by the entity, determined without reference to paragraphs 13(27)(c) and (28)(d).

• Marginal note:Qualified natural gas energy system evaluation

  (8) The Minister of Natural Resources may request from a qualifying entity all documentation and information necessary for the Minister of Natural Resources to complete a qualified natural gas energy system evaluation, including a system plan, and may refuse to complete the evaluation if such documentation or information is not provided by the entity.

• Marginal note:Special rules — adjustments

  (9) For the purpose of the definition clean electricity investment tax credit in subsection (1), the capital cost of a clean electricity property to a qualifying entity shall

  • (a) not include any amount

    • (i) in respect of which an amount was previously deducted under this section by any person,

    • (ii) in respect of which any other clean economy tax credit (as defined in subsection 127.47(1)) was deducted by any person,

    • (iii) that has, by virtue of section 21, been added to the cost of a property,

    • (iv) in respect of a qualified natural gas energy system, if a CCUS tax credit (as defined in subsection 127.44(1)) was deducted by any person in respect of any property that is part of the system,

    • (v) in respect of an expenditure incurred for a preliminary work activity, or

    • (vi) if a CCUS tax credit (as defined in subsection 127.44(1)) or a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted in respect of any part of the capital cost of the property by any person;

  • (b) be determined without reference to subsections 13(7.‍1) and (7.‍4);

  • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

    • (i) an amount of any government assistance or non-government assistance received by the qualifying entity in or before the taxation year in which the property was acquired, or

    • (ii) an amount not described in subparagraph (i) that, in the taxation year, the qualifying entity is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the entity; and

  • (d) be determined with reference to subsections 127(11.‍6) to (11.‍8) in respect of an expenditure or cost to a person except that

    • (i) the reference in subsection 127(11.‍6) to subsection 127(11.‍5) is to be read as a reference to section 127.‍491,

    • (ii) the reference in subsection 127(11.‍6) to subsection 127(26) is to be read as a reference to subsection 127.‍491(14), and

    • (iii) the term “a qualified expenditure” is to be read as “an expenditure eligible to be added to the capital cost of a clean electricity property”.

• Marginal note:Deemed deduction

  (10) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.44, 127.45, 127.48, 127.49 and 129, the amount determined under subsection (2) for a qualifying entity for a taxation year is deemed to have been deducted from its tax otherwise payable under this Part for the year.

• Marginal note:Repayment of assistance

  (11) Where a qualifying entity has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the capital cost of a particular property under paragraph (9)‍(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the capital cost to the entity of a separate clean electricity property that is deemed to be acquired in the particular year for the purposes of this section, provided that a transaction or event described in paragraph (16)(c) has not occurred in respect of the particular property.

• Marginal note:Partnerships

  (12) Subject to section 127.47, where, in a particular taxation year of a qualifying entity that is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a taxable Canadian corporation and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the qualifying entity’s share thereof shall be added in computing the clean electricity investment tax credit of the qualifying entity at the end of the particular year.

• Marginal note:Trust — assistance received by beneficiary

  (13) For the purposes of computing a clean electricity investment tax credit, where at a particular time a qualifying corporation described in paragraph (a) of the definition qualifying trust is a beneficiary of a qualifying trust, and the beneficiary or the trust has received, is entitled to receive or can reasonably be expected to receive government assistance or non-government assistance, the amount of that assistance that may reasonably be considered to be in respect of a clean electricity property for which a clean electricity investment tax credit is allocated by a partnership to the trust shall be deemed to have been received by the partnership as government assistance or non-government assistance, as the case may be, in respect of the property.

• Marginal note:Unpaid amounts

  (14) For the purposes of this section, where any part of the capital cost of a qualifying entity’s particular clean electricity property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a clean electricity investment tax credit would otherwise be available in respect of the particular property, such amount is deemed to be

  • (a) excluded from the capital cost of the particular property in the year; and

  • (b) added to the capital cost of a separate clean electricity property that is deemed to be acquired by the qualifying entity at the time the amount is paid, provided that a transaction or event described in paragraph (16)(c) has not occurred in respect of the particular property.

• Marginal note:Tax shelter investment

  (15) Subsection (2) does not apply if a clean electricity property — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property — is a tax shelter investment for the purpose of section 143.2.

• Marginal note:Recapture — conditions for application

  (16) Subsection (17) applies in a taxation year of a taxpayer if

  • (a) the taxpayer acquired a particular property that is

    • (i) a clean electricity property, other than qualified natural gas energy equipment, in the year or any of the preceding 10 calendar years, or

    • (ii) a clean electricity property that is qualified natural gas energy equipment, in the year or any of the preceding 20 calendar years;

  • (b) the taxpayer became entitled to a clean electricity investment tax credit in respect of the capital cost, or a portion of the capital cost, of the particular property; and

  • (c) in the year, the particular property (or another property that incorporates the particular property) is converted to an ineligible use, is exported from Canada or is disposed of without having been previously exported or converted to an ineligible use.

• Marginal note:Recapture

  (17) If this subsection applies in a taxation year of a taxpayer in respect of a particular property, the taxpayer is liable to pay an amount for the year, on or before its balance-due day for the year, determined by the formula

  (A − B) × (C ÷ D)

  where

  A

  is the amount of the taxpayer’s clean electricity investment tax credit in respect of the particular property;

  B

  is the total of all amounts each of which can reasonably be considered to be the portion of any amount previously paid by the taxpayer because of subsection (18) in respect of the property;

  C

  is an amount, not exceeding the amount determined for D, equal to

  • (a) if the particular property is disposed of to a person who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, and

  • (b) in any other case, the fair market value of the property; and

  D

  is the capital cost of the particular property on which the clean electricity investment tax credit was deducted.

• Marginal note:Recovery — qualified natural gas energy systems

  (18) In the taxation year of a taxpayer in which the compliance period of the taxpayer’s specified natural gas energy system ends, if the average actual emission intensity of the electrical energy produced is greater than 68.5 tonnes of carbon dioxide per gigawatt hour of electrical energy, the taxpayer is liable to pay an amount for the year, on or before its balance-due day for the year, determined by the formula

  A − B

  where

  A

  is the total amount of clean electricity investment tax credits received in respect of qualified natural gas energy equipment that was part of the system; and

  B

  is the total of all amounts each of which can reasonably be considered to be the portion of any amount previously paid by the taxpayer in respect of the equipment described in A because of subsection (17).

• Marginal note:Compliance — emission intensity

  (19) If a clean electricity investment tax credit was deducted by a taxpayer in respect of a qualified natural gas energy system, the taxpayer shall file with the Minister and the Minister of Natural Resources, within 180 days after the end of each of the first 20 operating years, a compliance report in prescribed form and manner including the following information:

  • (a) the actual emission intensity of the electrical energy produced by the system during the year;

  • (b) the quantity, in gigawatt hours, of electrical energy produced by the system during the year;

  • (c) any shutdown time of the system in respect of the year;

  • (d) for the compliance report in respect of the fifth operating year, a report that verifies the actual emission intensity of the electrical energy that is produced during each operating year of the compliance period, prepared by a qualified verification firm in respect of the system; and

  • (e) any information required in guidelines published by the Minister of Natural Resources.

• Marginal note:Minister’s determination

  (20) For the purpose of subsection (18), the Minister of Natural Resources shall review each of the compliance reports of a qualifying entity described in subsection (19) and the Minister may, in consultation with the Minister of Natural Resources, make a determination or redetermination of the actual emission intensity of the electrical energy produced by an entity’s qualified natural gas energy system for any operating year during the compliance period of the system.

• Marginal note:Failure to report

  (21) Each taxpayer that fails to file a compliance report as required by subsection (19) is liable to a penalty, for each such failure, in an amount, not exceeding the total of all clean electricity investment tax credits deducted by the taxpayer in respect of the system, equal to the amount determined by the formula

  [(4% × A) ÷ 365] × B

  where

  A

  is the total of all amounts, each of which is the amount of a clean electricity investment tax credit in respect of the system deducted by the taxpayer for a taxation year that ended before the applicable date in subsection (19); and

  B

  is the number of days during which the failure continues.

• Marginal note:Certain related party transfers

  (22) Subsections (16) and (17) do not apply to a qualifying entity (in this subsection referred to as the “transferor”) that disposes of a property to another qualifying entity (in this subsection referred to as the “purchaser”) that is related to the transferor if the purchaser acquired the property in circumstances where the property would be clean electricity property to the purchaser but for paragraph (c) of that definition.

• Marginal note:Certain related party transfers — recapture deferred

  (23) If subsection (22) applies, subsection 127(34) applies with such modifications as the circumstances require, including that the reference to subsection 127(33) be read as a reference to subsection 127.‍491(22).

• Marginal note:Recapture event reporting requirement

  (24) If subsection (16) or (22) applies to a qualifying entity for a particular year, the entity shall notify the Minister in prescribed form and manner on or before the entity’s filing-due date for the year.

• Marginal note:Information return — partnerships

  (25) If subsections (26) and (27) apply with respect to the property of a partnership for a particular fiscal period, the partnership shall notify the Minister in prescribed form and manner on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period.

• Marginal note:Recapture and recovery — partnerships

  (26) Subject to section 127.47, if subsection (12) has at any time applied to add an amount in computing the clean electricity investment tax credit of a current or former member of a partnership, then for the purposes of this Part, subsections (16) to (18) and (23) shall apply to determine amounts in respect of the partnership as if the partnership were a taxable Canadian corporation, its fiscal period were its taxation year and it had deducted all of the clean electricity investment tax credits that were previously added in computing the clean electricity investment tax credit of any member of the partnership under subsection (2) because of the application of subsection (12) in respect of its partnership interest.

• Marginal note:Member’s share of tax

  (27) Unless subsection (28) applies, if, in a taxation year, a taxpayer is a member of a partnership, the amount that can reasonably be considered to be the taxpayer’s share of any amount of tax determined because of subsection (26) in respect of the partnership for its fiscal period ending in the taxation year shall be added to the taxpayer’s tax otherwise payable under this Part for the taxation year.

• Marginal note:Election by member to pay tax

  (28) A taxable Canadian corporation that is a member of a partnership during a fiscal period of the partnership may elect, in prescribed form and manner, to add to its tax payable under this Part for its taxation year that includes the end of the fiscal period the total amount of tax determined for that fiscal period because of subsection (26) in respect of the partnership.

• Marginal note:Joint and several, or solidary, liability

  (29) Each current or former member of a partnership is jointly and severally, or solidarily, liable for any portion of the amount of tax determined because of subsection (26) in respect of the partnership for a fiscal period that is not added to the tax payable

  • (a) of a qualifying entity under subsection (27), other than a qualifying entity that is exempt from tax under this Part and has not agreed under subsection (3) to be subject to the provisions of this Act in respect of the entity’s clean electricity investment tax credit; or

  • (b) of a taxable Canadian corporation because of subsection (28) and paid by the corporation by its filing-due date for its taxation year that includes the end of the fiscal period.

• Marginal note:Former member liability

  (30) If a taxpayer was, at the time that an amount is determined because of subsection (26) in respect of the partnership for a taxation year, no longer a member of the partnership, the taxpayer’s liability for tax because of subsection (29) is limited to the total of all amounts each of which is an amount determined for the taxpayer under subsection (2) because of its membership in the partnership.

• Marginal note:Interest on recovery tax

  (31) For the purpose of applying subsection 161(1) to an amount of tax payable because of subsection (18), the balance-due day of a qualifying entity is deemed to be the balance-due day of the taxation year for the related clean electricity investment tax credit under subsection (2).

• Marginal note:Environmental compliance

  (32) A property that would otherwise be a clean electricity property of a qualifying entity is deemed not to be a clean electricity property of the entity if, at the time the property becomes available for use by the entity, there is substantial non-compliance by the entity with the requirements of any environmental law, by-law or regulation of Canada, a province, a municipality or a municipal or public body performing a function of government in Canada that is applicable in respect of the property.

• Marginal note:Compliance — reasonable efforts

  (33) The following rules apply in respect of a qualifying entity’s property described in subparagraph (e)(vi), (viii) or (ix) of the definition clean electricity property in subsection (1):

  • (a) where the property is temporarily operated in a manner that is an ineligible use solely because of a deficiency, failing or shutdown of the system of which it is a part, and that deficiency, failing or shutdown is beyond the control of the entity, the property is deemed, for the purposes of subsections (16) and (17), not to be operated in a manner that is an ineligible use during the period of the deficiency, failing or shutdown, if the entity makes all reasonable efforts to rectify the circumstances within a reasonable time; and

  • (b) for the purpose of paragraph (a), the system referred to in that paragraph may include property of another person or partnership if

    • (i) the property would reasonably be considered to be part of the system if the property were owned by the entity,

    • (ii) the property

      • (A) utilizes electrical energy or heat energy obtained from the system,

      • (B) transports or stores carbon dioxide obtained from the system, or

      • (C) generates or stores electricity that is transmitted by the system,

    • (iii) the operation of the property is necessary for the system to avoid operation in a manner that is an ineligible use, and

    • (iv) at the time the system first became operational, the deficiency, failing or shutdown in the operation of the property could not reasonably have been anticipated to occur within five calendar years after that time.

• Marginal note:Project

  (34) If a major project is undertaken in discrete phases for bona fide business or engineering reasons, the Minister may determine that each phase is a separate project for the purposes of applying paragraph (a) of the definition clean electricity property in subsection (1).

• Marginal note:Authority of the Minister of Natural Resources

  (35) For the purpose of determining whether a property is a clean electricity property, any technical guide published by the Department of Natural Resources, and as amended from time to time, is to apply conclusively with respect to engineering and scientific matters.

• Marginal note:Clean electricity investment tax credit — purpose

  (36) The purpose of this section is to encourage the investment of capital in the deployment of clean electricity property in Canada.

• (g) the Canada Infrastructure Bank; or

• (h) a prescribed entity. (société admissible)

• (h) Canada Growth Fund Inc. and any corporation that is a subsidiary wholly-owned corporation of Canada Growth Fund Inc.; or

• (i) a prescribed entity. (société admissible)

• (b) subject to subsection (3), in the case of an entity that is described in any of paragraphs (b) to (h) of the definition qualifying corporation in subsection (1), the Minister shall, with all due dispatch, pay to the entity an amount equal to its clean electricity investment tax credit for the year.

• (b) subject to subsection (3), in the case of an entity that is described in any of paragraphs (b) to (i) of the definition qualifying corporation in subsection (1), the Minister shall, with all due dispatch, pay to the entity an amount equal to its clean electricity investment tax credit for the year.

• Marginal note:Section 149 entities

  (3) Subsection (2) does not apply to an entity that is described in any of paragraphs (b) to (h) of the definition qualifying corporation in subsection (1) unless the entity agrees in writing with the Minister to be subject to the provisions of this Act in respect of the entity’s clean electricity investment tax credit, with any modifications to those provisions that the circumstances require.

• Marginal note:Section 149 entities

  (3) Subsection (2) does not apply to an entity that is described in any of paragraphs (b) to (i) of the definition qualifying corporation in subsection (1) unless the entity agrees in writing with the Minister to be subject to the provisions of this Act in respect of the entity’s clean electricity investment tax credit, with any modifications to those provisions that the circumstances require.

• (c) be reduced by the total of all amounts (other than an amount received or receivable from the Canada Infrastructure Bank) each of which can reasonably be considered to be in respect of the property and is

  • (i) an amount of any government assistance or non-government assistance received by the qualifying entity in or before the taxation year in which the property was acquired, or

  • (ii) an amount not described in subparagraph (i) that, in the taxation year, the qualifying entity is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the entity; and

• (c) be reduced by the total of all amounts (other than an amount received or receivable from an entity that is described in paragraph (g) or (h) of the definition qualifying corporation in subsection (1)) each of which can reasonably be considered to be in respect of the property and is