CRA indicates that periods where hydrogen continues to be produced by a clean hydrogen project are not disregarded for s. 127.48 ITC purposes

Some aspects of the investment tax credit (ITC) rules in s. 127.48 for clean hydrogen projects, such as compliance reporting to CRA regarding the project’s “actual carbon intensity" and whether there should be a recapture of the ITCs under s. 127.48(18), turn in part on the concept of an “operating year,” defined to “disregard … any period during which the project is not operating”, so that, for example, if it did not operate for one month, the operating year might be 13 months.

CRA indicated that where hydrogen continued to be produced by the project in the period described in each of the following scenarios, the project would be considered to be operating, so that such period would not be disregarded in determining the cumulative 365-day period set out in the “operating year” definition:

• The carbon capture and storage plant is shut down, but the hydrogen continues to be produced.
• The supply of the eligible renewable hydrocarbon is disrupted, but the hydrogen continues to be produced using a different eligible hydrocarbon.
• Dedicated wind turbines are down, but the hydrogen continues to be produced by using electricity from the electrical utility grid.

Neal Armstrong. Summary of 24 June 2025 External T.I. 2025-1063501E5 under s. 127.48(1) – operating year.