CRA provides an example of the application of the accelerated investment incentive CCA rules and clean ITC rules to solar panel acquisitions
Email this ContentCRA provided an extended example to illustrate the application of the accelerated investment incentive (AII) per Reg. 1100(2) and the “clean tech” ITC under s. 127.45(1) to the acquisition of solar panels. The taxpayer acquired solar panels (as its only relevant acquisitions) for $20M in 2024 (but with their not becoming available for use until January 2025) and acquired and deployed more such panels in 2027 for $10M. The specified energy property rules did not apply.
CRA noted that because the $20M of property was acquired before 2025, it would be a Class 43.2 property (50% CCA rate) rather than a Class 43.1 property (30% CCA rate) even though no CCA could be claimed until 2025 due to the available-for-use rules.
Its CCA claim for 2025 would be calculated as follows:
| Capital cost | $20M |
| AII per Reg. 1100(2) – A - (c)(ii) (i.e., 1/2 X $20M) | $10M |
| Subtotal | $30M |
| CCA (50% Class 43.2 rate) | $15M |
The clean tech ITC for 2027 would be 20% of the capital cost of $20M, or $4M.
The CCA claim for 2027 would consist of a small ($0.25M) claim for the Class 43.2 property (reflecting a UCC deduction for the 2025 ITC claim in addition to the 2025 and 2026 CCA claims) plus CCA regarding the $10M Class 43.1 acquisition calculated as follows:
| Capital cost | $10M |
| AII per Reg. 1100(2) – A - (b)(iii) (i.e., 5/6 X $10M) | $8.33M |
| Subtotal | $18.33M |
| CCA (30% Class 43.2 rate) | $5.5M |
The clean tech ITC for 2027 would be 20% of the capital cost of $10M, or $2M.
Neal Armstrong. Summary of 24 June 2024 External T.I. 2023-1000861E5 under Reg. 1100(2) – A.