The CleanTech North event explores the complex world of tax credits

It looks like there’s a lot to be excited about as cleantech initiatives go after last week’s federal budget release. But there are also many questions that remain to be answered, especially when it comes to how well and how quickly companies will be able to collect billions of dollars in tax credits.

That issue formed the cornerstone of Monday’s second installment of a webinar on tax credits hosted by CleanTech North and moderated by its CEO, Brian Watson. He was joined by Jigna Shah, a partner in Deloitte Canada’s global investment and innovation incentives practice, Jonathan Garbutt, a lawyer and attorney at Dominion Tax Law, and Lynn Cote, national cleantech lead at Export Development Canada.

On the positive side, Watson, who is also senior vice president of business development at financial services firm Venbridge, which specializes in the financing of accumulated tax credits, said cleantech dominates much of the discussion among politicians and outsiders alike. organizations is a definite win.

in an interview with IT World Canada Before the webinar, he said a review of past federal budgets showed that the word “cleantech” was mentioned for the first time in the 2017 edition.

“From one to two mentions of the word to the central focus of the budget, it’s been a hell of a ride. There are some positives in the 2023 budget and a lot for (the federal government) to applaud.”

According to him, the downside revolves around two main issues: how quickly the tax breaks will be available and which companies will receive such subsidies.

“If you were listening intently to the budget last week and you’re still scratching your head, don’t worry, you’re in very good company,” Cote said. “A lot of people are trying to figure out what it all means. As always, the devil will be in the details.”

Despite the lack of detailed information on tax credits and how they work, Shah said that “no matter what stage of business you are in or what you do; – there will be a cleantech loan that you can take advantage of.”

The gray area for Watson, which has yet to be clarified, includes software and hardware elements within the cleantech offering, and whether they will qualify for a similar type of subsidy.

An example of this would be the use of artificial intelligence (AI) to manage fuel consumption and load balancing to limit or eliminate the use of excess fuel in the rail system. “That type of pure-tech software company doesn’t fit anywhere (in the budget) as far as we can tell,” he said.

Even if an AI company is eligible, it has not yet been determined what or how many state agencies will oversee the issuance of said tax credit.

According to a statement released today by federal Environment and Climate Change Minister Stephen Guilbeau, “Never in Canada’s history has there been a more compelling budget to fight climate change and build a clean, electrified economy.

“This budget outlined more than $80 billion in new funds to fight climate change, starting with five major new tax credits to accelerate clean technology in Canada. This brings the total we are doing to fight climate change to $200 billion. The investments in new and expanded Clean Tax Credits that we are proposing in Budget 2023 will help create middle-class jobs and long-term economic growth while helping to build the net-zero industries of tomorrow.”

The five loans, which will total $60 billion over the next 10 years, are: Clean Electricity Investment Tax Credit, Clean Technology Production Tax Credit, Clean Hydrogen Investment Tax Credit, Carbon Capture, Use and Storage Investment Tax Credit and Clean. Technology investment tax credit.

The problem, Garbutt noted, is that the budget provides “no additional funding to the Canada Revenue Agency or Natural Resources Canada (NRCan) or any other entity to run this mega program.

“The CRA does not have additional or additional funding to develop new programs to be able to implement these tax credits,” he said. “Therefore, the only thing they will be able to do, because they don’t have extra money, is to cancel their existing programs.

“That means that for taxable entities, these credits will be provided through the Income Tax Act, they will be provided through the income tax system, which means you have to file a tax return, your tax return for corporate entities; six months after the end of the financial year in which you made the investment. So that’s six months.

“And then you have to file and claim these tax credits back. And it will take three to four months in a normal course. It’s not necessarily money that comes forward.”

Garbutt added that despite these and other shortcomings, “the last thing we want is for the Canadian government to say they’re going to come up with a new software program, because we all know how that went.”

In the meantime, Watson said he hopes to host a third webinar where “we might have somebody from CRA and somebody from NRCan with those details because I think everybody would really like to hear from the source how is this going out.”

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