|Agency||•Finance Canada/Natural Resources Canada|
|Related Policies||Canadian Renewable Conservation Expenses (CRCE)|
|Policy Superseded by||Accelerated Capital Cost Allowance|
•Taxes and Tax Incentives
|Description||The Income Tax Act contains the only non-R&D programme initiated in the 1980s that is still in existence today. It is an accelerated capital cost allowance for certain renewable energy assets.
The federal Income Tax Act provides an accelerated capital cost allowance (30% capital cost allowance rate computed on a declining balance basis) for certain types of renewable energy equipment used to generate electricity or to produce thermal energy for direct use in an industrial process. A range of renewable energy conversion and energy efficiency equipment are eligible for inclusion, such as certain co-generation systems, small-scale hydropower installations, wind energy conversion equipment, certain photovoltaic and active solar heating equipment, and equipment used in certain landfill gas applications.
The Income Tax Act also allows the first, exploratory wind turbine of a wind farm to be fully deducted in the year of its installation, in a manner similar to the one in which the first, exploratory well of a new oil field can be written off.
The eligibility has been broadened to include certain fixed-location fuel cells and ancillary fuel reformation and electrolysis equipment acquired after 18 February 2003.
The Canadian Renewable and Conservation Expense (CRCE) category of expenditure is intended to promote the development of conservation and renewable energy projects in the same way that is currently done for investments in other types of resource activities. Under CRCE, eligible expenditures are 100% deductible in the year they are incurred or can be carried forward indefinitely for deduction in later years.
NOTE: This policy is still in force. A new database entry accounts for changes to the measure (see superseding entry: Accelareated Capital Cost Allowance and related entry: Canadian Renewable and Conservation Expenses).