Analysis of the 2024 Federal Budget by PwC Canada: Key takeaways and insights

2024 Federal Budget analysis | PwC Canada

“Revitalizing Canadian Businesses: A Look at the Latest Tax Measures

As the world moves towards a greener future, Canada is taking steps to incentivize businesses to invest in clean energy and electric vehicles. The recent budget announcements have introduced several tax measures aimed at promoting sustainability and innovation in various industries. Let’s take a closer look at some of the key initiatives and their potential impact on the Canadian economy.

Clean Electricity Investment Tax Credit: Powering the Future

One of the highlights of the 2023 budget is the introduction of a Clean Electricity Investment Tax Credit (ITC) to encourage the adoption of clean energy sources. Eligible Canadian corporations will receive a refundable ITC equal to 15% of the capital cost of property used to generate electricity from sources such as solar, wind, water, and geothermal energy. Special rules apply for property that generates electricity from natural gas with carbon capture and for equipment used to transmit electrical energy between provinces or territories.

To qualify for the 15% ITC, companies must meet certain labour requirements and comply with the eligibility criteria. Property that is eligible for the ITC includes equipment used for electricity storage and transmission, as well as certain waste materials. The ITC will be available for new eligible property acquired after April 15, 2024, and before 2035, for projects that did not begin construction before March 28, 2023.

EV Supply Chain Investment Tax Credit: Driving Innovation

In a move to support the electric vehicle industry, the budget introduces an EV Supply Chain ITC for buildings used in various segments of the electric vehicle supply chain. Taxpayers who claim the Clean Technology Manufacturing ITC in specific segments will qualify for a 10% credit on building costs. The ITC will be effective for property acquired after December 31, 2023, and will be gradually reduced to 0% after 2034.

Clean Technology Manufacturing Investment Tax Credit: Fostering Mineral Production

The clean technology manufacturing ITC is being updated to include production of qualifying minerals at polymetallic projects. Property used in qualifying mineral activities that primarily produce qualifying materials will be eligible for the credit. A safe harbor rule will apply to mitigate the effects of mineral price volatility on potential recapture of the ITC.

Tax Incentives for Property Development: Accelerating Capital Cost Allowance

The budget includes an Accelerated CCA for purpose-built rental housing projects and immediate expensing for productivity-enhancing assets. These incentives aim to stimulate investments in rental housing and technology infrastructure, fostering growth and innovation in the Canadian economy.

Innovative Approaches to Taxation: Addressing Vacant Lands

The government is considering introducing a tax on residentially zoned vacant land to incentivize property development and discourage speculative investment. Consultations are underway to explore ways federal policies can better support homeownership and address housing affordability issues in Canada.

In conclusion, the latest tax measures announced in the budget reflect Canada’s commitment to sustainability, innovation, and economic growth. By encouraging investments in clean energy, electric vehicles, and property development, the government aims to create a more resilient and competitive business environment. These initiatives not only benefit businesses but also contribute to a cleaner, greener future for all Canadians. Let’s embrace these opportunities for a brighter tomorrow.”



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