As part of Canada's commitment to reduce overall greenhouse
gas emissions, successive federal governments have introduced a
number of tax measures to incentivize investment in
environmentally-friendly energy alternatives.
With the current Liberal federal government likely seeking to
introduce additional measures, potentially as early as the next
federal budget, this article discusses some of the more commonly
used incentive measures currently in place.
Depreciable properties
The Income Tax Act (Canada) (the Tax Act) generally
prohibits taxpayers from deducting capital expenditures. Instead,
taxpayers are entitled to claim a form of tax depreciation, or
"capital cost allowance" (CCA), in respect of amounts
expended on capital properties which are also "depreciable
properties". Essentially, taxpayers may deduct a percentage of
the property's value in respect of notional depreciation every
year in which they own the property, until the property is
