Businesses in Canada view investments in capital equipment differently based on their particular needs. When looking at investing in renewable energy projects companies often overlook potential savings which can be achieved through measures other than upfront grants or rebates for purchasing this equipment.
As an example, many companies often overlook the accelerated capital cost allowance under Class 43.2 of the Canadian Income Tax Act, Annex II. This is designed to encourage investments that generates or conserves energy by using a renewable energy source (such as solar thermal heating). This provision allows the capital cost of eligible equipment to be deducted at an accelerated rate of 50% per year on a declining balance basis.
This accelerated deduction schedule can be a significant incentive for companies and should not be overlooked when deciding what type of capital equipment should be purchased. It also has the added benefit of lowering your operating costs and improving the marketability of your company. This is why companies should not base investments in renewable energy solely on up front incentives. For more information on these tax measures, contact the Class 43.2/43.2 Secretariat in the Canmet Energy Technology Centre at 613-996-0890.