Go green, save green: 5 clean tax incentives to save your business money
With Earth Day (April 22) around the corner and gas prices at painful highs, we wouldn’t be surprised to hear you’re looking at ways to help your business join the clean economy. The good news is there’s never been more clean tax incentives available to help green your business—and save you a few bucks in the process—than there are today.
Here are some valuable tax incentives to start taking advantage of:
CleanBC tax credits and incentives
Of all the incentives on this list, this is the one you’ve likely heard the most about. In addition to offering point-of-purchase/lease rebates on eligible zero and low-emission passenger vehicles (ZEVs)—$3,000 for new battery electric, fuel cell or long-range plug-in hybrid vehicles and $1,500 for short-range plug-in hybrid vehicles—the BC Government created the Specialty Use Vehicle Incentive program (SUVI), which offers a post-purchase/lease rebate for specialty-use vehicles not included in the broader CleanBC Go Electric Program. SUVI eligible vehicles include commercial vehicles such as cargo e-bikes, utility vehicles and a variety of medium- and heavy-duty vehicles, among others.
On top of these programs, the BC Government announced on February 23, 2022 that individuals are exempt from paying PST on the purchase or lease of qualifying used ZEVs.
Introduced as part of the 2022 BC Budget, this refundable income tax credit helps to offset the costs for qualifying retrofits that improve the energy efficiency of eligible commercial buildings and multi-unit residential buildings. BC individuals and corporations can claim a credit amount of 5% of qualifying expenditures paid on the retrofits, as long as they improve the building’s energy efficiency and meet energy-use targets.
BC Hydro offers several incentives to commercial customers, small industrial sites and residential stratas for eligible energy efficiency upgrades or new builds. These include funding for fuel switching, electrification, lighting and HVAC upgrades that reduce your building’s energy consumption and emissions, as well as free advisory services and resources for increasing efficiencies in other ways. Use the Incentive Search Tool on the program website to see which ones your business could qualify for.
Federal tax credits and incentives
Similar to its CleanBC counterpart, the federal iZEV program offers point-of-sale/lease incentives for consumers who buy or lease eligible ZEV vehicles, up to a maximum of $5,000 depending on the vehicle. Incentives can be applied to eligible ZEVs leased for at least 12 months, but will be prorated based on the length of a lease less than 48 months. Incentives will also be applied even if delivery, freight and other fees (e.g., colour, add-on accessories, options) push the actual purchase price over the set limits.
Additionally, starting back in 2019, the federal government has been offering a 100% tax write-off through a deductible up to $55,000 plus sales tax for businesses who purchase eligible ZEVs for use on or after March 19, 2019, and before January 1, 2028. See our previous blog post about this incentive for more detail on how it works.
It’s important to note that businesses that receive an incentive from the federal iZEV program can’t use the 100% write-off for ZEVs—they can only use one or the other.
Under the CCA regime, the federal government provides businesses with accelerated CCA for investments in specified clean energy production or conservation equipment (Classes 43.1 and 43.2 of Schedule II to the Income Tax Regulations). This includes eligible equipment that generates or conserves energy by using a renewable energy source (e.g., wind or solar), using fuel from waste (e.g., landfill gas, wood waste or manure) or making efficient use of fossil fuels (e.g., high efficiency cogeneration systems).
Upgrading your business to use clean energy systems and equipment is a great way to help out both the planet and your bottom line. Take a look at the resources above and if you need help with how you could make them work with your business, our advisors are here to provide you with the information and guidance you need.