The Canadian federal government encourages businesses to invest in clean energy generation and energy efficiency equipment by providing both a Canadian Renewable and Conservation Expense deduction (“CRCE”) and an accelerated CCA rate under Class 43.1 and Class 43.2. These classes include a variety of equipment that generates or conserves energy by using a renewable energy source (e.g., wind, solar, small hydro), using fuels from waste (e.g., landfill gas, wood waste, manure), or by making efficient use of fossil fuels (e.g., high efficiency cogeneration systems).
Flow-through shares offer an effective means of attracting investment when capital needs are high and the profit horizon is distant. Only flow-through shares enable the flow-through of a CRCE deduction for qualified expenditures incurred. The investor in flow-through shares or through a Limited Partnership will receive a tax deduction for qualifying expenses up to the particular investor’s subscription amount. This presents a significant opportunity for renewable energy markets.