Income Tax Act - Accelerated Capital Cost Allowance
The accelerated Capital Cost Allowance (CCA), under Class 43.1 and 43.2 of Schedule II to the Income Tax Regulations, allows investors an accelerated write-off of certain equipment used to produce energy in a more efficient way or to produce energy from alternative renewable sources.
A 50% accelerated CCA is provided under Class 43.2 for eligible equipment that generated either (1) heat for use in an industrial process or (2) electricity by using a renewable energy source (e.g. wind, solar, small hydro), waste fuel (e.g. landfill gas, manure, wood waste) or making efficient use of fossil fuels (e.g. high efficiency cogeneration systems). Class 43.2 was introduced in 2005 and is currently available for assets acquired on or after February 23, 2005 and before 2020. For assets acquired before February 23, 2005, accelerated CCA is provided under Class 43.1, at 30%. The eligibility criteria for these classes are generally the same except that cogeneration systems that use fossil fuels must meet a higher efficiency standard for Class 43.2 than that for Class 43.1. Systems that only meet the lower efficiency standard continue to be eligible for Class 43.1.
Budget 2012 expanded Class 43.2 with respect to waste-fuelled thermal energy equipment, and equipment of a district energy system that uses thermal energy provided primarily by eligible waste-fuelled thermal energy equipment. Class 43.2 was also expanded to include equipment that uses the residue of plants -generally produced by the agricultural sector -to generate electricity and heat.
A 50% accelerated CCA is provided under Class 43.2 for eligible equipment that generated either (1) heat for use in an industrial process or (2) electricity by using a renewable energy source (e.g. wind, solar, small hydro), waste fuel (e.g. landfill gas, manure, wood waste) or making efficient use of fossil fuels (e.g. high efficiency cogeneration systems). Class 43.2 was introduced in 2005 and is currently available for assets acquired on or after February 23, 2005 and before 2020. For assets acquired before February 23, 2005, accelerated CCA is provided under Class 43.1, at 30%. The eligibility criteria for these classes are generally the same except that cogeneration systems that use fossil fuels must meet a higher efficiency standard for Class 43.2 than that for Class 43.1. Systems that only meet the lower efficiency standard continue to be eligible for Class 43.1.
Budget 2012 expanded Class 43.2 with respect to waste-fuelled thermal energy equipment, and equipment of a district energy system that uses thermal energy provided primarily by eligible waste-fuelled thermal energy equipment. Class 43.2 was also expanded to include equipment that uses the residue of plants -generally produced by the agricultural sector -to generate electricity and heat.
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