Industry welcomes energy efficiency tax break


The industry is welcoming a plan by the federal government to offer tax write-offs for investment in energy efficient and clean energy equipment.

Announced in the 2018 Fall Economic Statement on Nov. 21, the move, designed to stimulate business investment and create jobs as well as protect the environment, will allow for the immediate tax write-off of some types of clean energy equipment, saving about 30 percent on the cost.

It’s something that the industry has been encouraging the government to do for at least five years as an alternative to rebates and other incentives that have skewed sales in the industry depending on when they are available, reported Martin Luymes, vice president, government and stakeholder relations, for the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI).

“In fact, HRAI’s pre-budget submission talks about tax changes and even tax credits for investing in energy efficient technologies, which goes further than just an appreciated capital cost allowance, which is what they’ve done.”

In the past, this equipment would have had to have been depreciated, for tax purposes, typically over four years. Now it can be depreciated 100 per cent upon installation. Of course, the initiative will only benefit profit-making companies that pay enough in tax to take advantage of the write-offs.

Selling jobs

HRAI is working with experts to put together a presentation on how contractors can use the new tax benefits to sell jobs. “If a contractor can’t articulate what the benefit is to a client, the tax change is meaningless,” said Luymes. “Contractors selling systems should be able to explain all the benefits of investing in more efficient mechanical systems, one of which will now be an immediate tax benefit which could amount to a third of the value of the investment.”

HRAI sought and obtained clarification from the Canada Revenue Agency (CRA) on what equipment would be covered. It wasn’t clear in the Fall Economic Statement, said Luymes.

The list includes things like high-efficiency co-generation equipment, solar heating, geothermal equipment, waste-fueled thermal energy equipment and heat recovery equipment.

The challenge now, added Luymes, is to get the word out to contractors, engineers, developers and building owners so that they know about the program and take advantage of it.


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