Electric Mobility Canada welcomes federal budget investments in Canada’s EV industry, from mining to mobility
OTTAWA, March 28, 2023 – Electric Mobility Canada (EMC) is pleased to see Canada’s 2023 budget includes investments that will help advance the electrification of the transportation industry, create sustainable jobs, and fight climate change while helping Canadians get easier access to a clean electricity grid.
From the transcontinental railway to the transcontinental EV way
“We congratulate the federal government for demonstrating leadership in its commitment to developing the Canadian clean transportation industry,” said Daniel Breton, EMC’s president and CEO. “The measures announced in today’s budget will help support the development of the Canadian EV industry, from critical mineral production to EV manufacturing to a clean electricity infrastructure that will lead to the growing number of high-paying sustainable jobs we will need to support the transition to a net-zero economy by 2050.”
The budget includes measures aimed at making sure that Canada is competitive on a global scale, including:
a) a 15 per cent tax credit that will apply to capital spent on projects to extract and process critical minerals, as well as equipment used along the supply chain for electric vehicles;
b) a 15 per cent refundable tax credit for eligible investments in non-emitting electricity generation systems, abated natural gas electricity-fired electricity generation, stationary electricity storage systems, and equipment for the transmission of electricity between provinces and territories;
c) a refundable tax credit equal to 30 per cent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals, including:
- Extraction, processing, or recycling of critical minerals essential for clean technology supply chains, specifically: lithium, cobalt, nickel, graphite, copper, and rare earth elements;
- Manufacturing of renewable or nuclear energy equipment;
- Processing or recycling of nuclear fuels and heavy water;
- Manufacturing of grid-scale electrical energy storage equipment;
- Manufacturing of zero-emission vehicles; and,
- Manufacturing or processing of certain upstream components and materials for the above activities, such as cathode materials and batteries used in electric vehicles.
The investment tax credit is expected to cost $4.5 billion over five years, starting in 2023-24, and an additional $6.6 billion from 2028-29 to 2034-35. The credit would apply to property that is acquired and becomes available for use on or after January 1, 2024, and would no longer be in effect after 2034, subject to a phase-out starting in 2032.
d) Enhancing the reduced tax rates for zero-emission technology manufacturers:
To build more zero-emission technologies in Canada, Budget 2021 reduced corporate income tax rates by half for zero-emission technology manufacturers to drive investment and create new jobs. These rates, of 4.5 per cent for small businesses and 7.5 per cent for other businesses, are currently scheduled to expire beginning in 2032, subject to a phase-out starting in 2029. With new opportunities ahead, extending this support is important to ensure businesses have the runway they need to innovate and produce zeroemission technologies.
Budget 2023 proposes to extend the availability of these reduced rates by another three years, such that the reduced tax rates would no longer be in effect for taxation years starting after 2034, subject to a phase-out starting in 2032.
e) Budget 2023 proposes to provide $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada. The Strategic Innovation Fund will also direct up to $1.5 billion of its existing resources towards projects in sectors including clean technologies, critical minerals, and industrial transformation.
f) Modernizing the NRC: In Budget 2023, the government proposes to introduce legislative amendments to the National Research Council Act, as well as any other consequential, coordinating or transitional amendments as necessary, to provide the National Research Council operational flexibilities that will better ensure it can provide hands on support to Canada’s innovators through timely access to specialized facilities and expertise.
g) Supporting procurement of zero-emission vehicles for federal fleets: In Budget 2023, the government proposes to amend the Revolving Funds Act to increase the drawdown authority under Public Services and Procurement Canada’s (PSPC) Optional Services Revolving Fund by $10 million. The government also proposes to add a new business line item to allow PSPC to procure zero emission vehicles on behalf of client departments and agencies.