The Trudeau government is hoping that a new tax incentive for businesses investing in wind turbines and solar panels will help juice investment and job growth in Canada’s clean energy sector.
At the same time, Finance Minister Bill Morneau is also proposing another new incentive that would apply to oil and gas sector property expenses. Canada has promised for years to phase out inefficient fossil fuel subsidies and continues to do so.
Morneau’s Nov. 21 fiscal update proposed a new “immediate expensing” temporary rule that would allow businesses to immediately write off the cost of “specified clean energy equipment” on their taxes.
For example, a company wanting to install $100 million worth of wind turbines could deduct the whole cost in their taxes in the year they incurred the cost, as opposed to $40 million under the current rules, resulting in about $16 million in tax savings.
“This will help achieve climate goals, and boost Canada’s global competitiveness,” said Morneau during his speech unveiling the fiscal update in the House of Commons.