Full Expensing for Clean Energy Investments
Full expensing for clean energy investments, which allows businesses to immediately write off the full cost of specified clean energy equipment (Classes 43.1 and 43.2).
Offered by Canada Revenue Agency
Amount
100% first-year deduction for eligible Class 43.1 clean energy equipment acquired after 2024 and available for use before 2030; 75% in 2030-2031; 55% in 2032-2033
Quick eligibility check
Who can apply
If you acquire property after November 20, 2018, and it becomes available for use before 2028, it is eligible for an enhanced first-year allowance.
The rules relating to short tax years and restrictions described for the AII apply in respect of this enhanced allowance.
Certain additional restrictions apply to EP. Under the AII, if you acquire property for which a CCA deduction or a terminal loss has been claimed before you acquired it, it is only eligible for the incentive if both of the following conditions are met:
- neither you nor a non-arm's length person previously owned the property
- the property has not been transferred to you on a tax-deferred "rollover" basis
In other words, properties acquired in non-arm's length and roll-over transactions are not eligible for this incentive. They are considered NEP.
About the funding
Full expensing for clean energy investments, which allows businesses to immediately write off the full cost of specified clean energy equipment (Classes 43.1 and 43.2).
The enhanced allowance initially provides a 100% deduction, with a phase-out for property that becomes available for use after 2023.
Full expensing effectively suspends the half-year rule for property eligible for this measure.
Year property becomes available for use: 2018 to 2023; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: 25; Enhanced first-year allowance: 100
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Year property becomes available for use: 2024; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: 25; Enhanced first-year allowance: 75
Year property becomes available for use: 2025; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: N/A; Enhanced first-year allowance: 75
Year property becomes available for use: 2026; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: N/A; Enhanced first-year allowance: 55
Year property becomes available for use: 2027; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: N/A; Enhanced first-year allowance: 55
Year property becomes available for use: 2028 onward; Normal first-year allowance (half-year rule) for Class 43.1: 15; Normal first-year allowance (half-year rule) for Class 43.2: N/A; Enhanced first-year allowance: N/A
Specified clean energy equipment acquired after February 21, 1994, qualifies for an accelerated CCA rate of 30% calculated on a declining-balance basis under Class 43.1. You can depreciate equipment acquired after February 22, 2005, and before 2025, that would otherwise be eligible for Class 43.1 (subject to certain limited exceptions), at an accelerated CCA rate of 50% under Class 43.2. Many of these assets would otherwise depreciate at lower rates of 4%, 8%, or 20%.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Accelerated Investment Incentive | Tax Credit | no fixed amount | Open |
| Air Quality Improvement Tax Credit | Tax Credit | no fixed amount | Open |
| Clean Technology Investment Tax Credits (ITC) | Tax Credit | no fixed amount | Open |
| Clean Technology (CT) Investment Tax Credit (ITC) | Tax Credit | No fixed amount | Open |
