Federal Green Tax Rebates Are Now Available, And They Can Help Your Business Go Solar

Canada Parliament Building

The Federal Government of Canada recently announced new tax incentives for businesses looking to purchase eco-friendly equipment, and at the top of list is solar.

On the 21st of November, 2018, the Government of Canada released their annual Fall Economic Statement; and there is a lot to break down that relates to businesses going solar. New tax incentives seek to support increased business investment in Canada which means that your business can Make The Switch to solar by harvesting these federal-provincial tax savings. While we recommend checking out the Federal Government’s full Economic Statement, below we have broken down the new incentives and what it means for your business.

Depreciation of Assets/Canadian Taxes

Under current income tax regulations, a portion of capital costs is deductible through what is known as a Capital Cost Allowance, or CCA. Generally, CCA deductions are scheduled according to the class of equipment and are calculated on a declining-balance basis where the taxpayer’s first year CCA is generally limited to less than 50% cost deduction and the balance of the undepreciated capital cost is subsequently written down over the life of the asset. Simply put, accelerated CCA front-end loads the deductibility of newly acquired assets and allows the business to harvest those tax savings to redeploy elsewhere, including other qualified assets, in the early years of the new asset’s life.

Investing In New Clean Energy Equipment

Under Class 43.1 and Class 43.2 in the Canadian Income Tax Regulations guide, businesses have the ability to immediately deduct 100% from qualifying clean energy equipment which allows a business owner to maximize tax deduction in the first year for immediate redeployment within their business. This means that if you were to purchase a solar system from Switch Energy, your business would be able to write down the asset in the year that it is put into use. This will result in your business paying fewer taxes, lowering its electricity costs, and having a positive impact on the environment.

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