The BC clean building tax credit was introduced in 2022 to help make energy retrofits in large buildings more affordable.
Owners of multi-unit residential and commercial buildings who are eager to save money on energy costs may hesitate to make energy-efficient retrofits due to the expenses involved. The BC clean building tax credit aims to make these improvements easier to implement.
Retrofits that qualify for this tax credit also allow building owners to lower energy costs for tenants and reduce greenhouse gas emissions.
T2inc’s online tax accountants explain how it works and how you can qualify for this 5% credit on your next return.
Who is eligible for the BC clean buildings tax credit?
The BC clean buildings tax credit is applicable to retrofits made on specific types of buildings. Building owners do not need to live within BC, but eligible retrofits must be implemented on buildings located within the province.
Buildings that qualify for the BC clean buildings tax credit
Eligible buildings must have four or more units and belong to one of the following categories:
- Multi-unit residential buildings
- Colleges and universities
- Food services
- Long-term care facilities
- Retail (food and other)
- Other buildings classified as class 6 or 8 properties under the Assessment Act.
Retrofits that qualify for the BC clean buildings tax credit
Alterations made to an eligible building must also meet certain specifications. Overall, they must affect building systems and specifically reduce the energy use intensity of the building.
Eligible costs include changes made to:
- Heating, ventilation and air-conditioning systems
- Interior and exterior lighting
- Water heating equipment and pumps
- Elevators and escalators
- The building envelope, including insulation
- Receptacle loads and miscellaneous equipment
All retrofits must be certified by a qualified professional. Fees incurred for this service, permits, and the rental of equipment may also be eligible for the 5% tax credit.
Applying for the BC clean buildings tax credit
Applying for the BC clean building tax credit is a two-step process which can be started 12 months after the retrofit is finished. Building owners need to work with qualified professionals to verify that renovations meet made-in-BC targets and were implemented specifically for the purpose of reducing the energy-use intensity of the building.
This process involves three steps.
Step One: Certification with the Ministry of Finance
A building owner must hire a certified professional, such as an architect, an engineer, or an energy advisor who has been certified by Natural Resources Canada. This individual will verify that the alterations made to the building do in fact reduce its energy use-intensity and were made specifically with that intention.
The qualified professional must confirm calculations of the energy use intensity of the building before and after the retrofit, proving that the retrofit was effective in meeting energy-use reduction goals. The results of their evaluation can be submitted to the Ministry of Finance using an online form.
Information required for this form includes:
- Floor area of the building
- Type and amount of energy (or fuel) used by the building for a year, ending within 12 months before the retrofit began
- Type and amount of energy (or fuel) used by the building for a year, beginning after the retrofit is completed (And ending on or before March 31, 2027)
- An electronic copy of their report which contains, among other things, a description of the retrofit
After the information has been submitted, the Ministry of Finance will provide the professional with a confirmation number, allowing you to proceed to Step Two.
Step Two: Applying for a tax credit certificate number
The second step also involves filling out an online form. Submit only one application per retrofit.
You will need to include the following:
- Your confirmation number from the Ministry of Finance
- Parcel identification (PID) of the building
- Cost of the retrofit
- Business Number (BN), or Trust Account Number (TAN) or the last 4 digits of your Social Insurance Number (SIN) for all taxpayers claiming the credit. Note: be sure to include the full legal names of all qualified taxpayers who intend to claim the credit for that retrofit.
Once your application is approved you will receive a certificate number by post, which you can use to apply for the tax credit.
Step Three: Applying for the tax credit
Using the information acquired in the first two steps, apply for the credit when you file your business income tax return with the Canada Revenue Agency. This must be done within 18 months of the end of the tax year after the tax year in which the retrofit was done.
T2inc can help your business benefit from the BC clean buildings tax credit
Harness the power of the BC clean buildings tax credit to save money and cut carbon emissions. Modernizing buildings helps reduce energy-related costs and supports the CleanBC commitment to reduce provincewide emissions in buildings and communities by more than half by 2030.