Budget 2016: Expanding Tax Support For Clean Energy

Budget 2016 proposes new measures that are intended to encourage investment in technologies that help reduce emissions of greenhouse gases and air pollutants. In particular, the Government proposes to expand the range of property in respect of which accelerated rates of capital cost allowance ("CCA") may be claimed.

The CCA regime under the Income Tax Act allows for deductions to be claimed in respect of certain depreciable property at rates provided in the Income Tax Regulations (the "Regulations"). For CCA purposes, property is divided into a series of classes and the rate of CCA that may be claimed in respect of a particular property is dependent on its CCA class.

Under the Regulations, CCA in respect of property in Classes 43.1 and 43.2 may be claimed, on a declining-balance basis, at accelerated rates of 30 per cent and 50 per cent, respectively. Property in Classes 43.1 and 43.2 includes specific clean energy equipment that generates or conserves energy by