Federal Government Releases Proposals Relating To Clean Electricity Investment Tax Credit, Clean Technology Manufacturing Investment Tax Credit, And New EV Supply Chain Investment Tax Credit – Oil, Gas & Electricity

On April 16, 2024, Canada’s Deputy Prime Minister and
Minister of Finance, Chrystia Freeland, delivered the Liberal
Government’s federal budget, Fairness for Every
Generation (Budget 2024). The most notable tax measure in
Budget 2024 is the proposal to increase the capital gains inclusion
rate from one-half to two-thirds, effective for capital gains
realized on or after June 25, 2024. This measure will apply to all
capital gains realized by corporations and trusts, but only will
apply to individuals in respect of the portion of capital gains
realized in the year that exceeds $250,000.

Additionally, and among other things, Budget 2024:

• provides design and implementation details of the Clean
  Electricity Investment Tax Credit (CE ITC) for both public utility
  and non-public utility taxpayers;




• expands the application of the Clean Technology Manufacturing
  Investment Tax Credit to polymetallic projects (i.e., projects that
  produce multiple minerals);




• introduces a new Electric Vehicle Supply Chain Investment Tax
  Credit which will be available in respect of eligible property that
  is acquired and becomes available for use on or after January 1,
  2024; and




• announces the Government’s intention to proceed with
  certain measures affecting Indigenous communities, including the
  expansion of opt-in tax jurisdiction frameworks, creating an
  Indigenous Loan Guarantee Program that will include up to $5
  billion in loan guarantees, and providing additional funding to
  support Indigenous economic opportunity.

Budget 2024 also confirms the Government’s intention to
proceed with various previously announced legislative proposals
with respect to the clean economy tax credits, including the Clean
Hydrogen Investment Tax Credit and the expansion of the Clean
Technology Investment Tax Credit and the CE ITC to support
investments in the generation of electricity and heat from waste
biomass.

For a discussion of these tax measures and others in Budget
2024, please see McCarthy Tétrault’s Budget 2024
Commentary.

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