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Your reporting responsibilities

There are additional reporting responsibilities if you claimed the Clean Electricity ITC for a qualified natural gas energy system.

Annual compliance reporting

If you claimed the Clean Electricity ITC for a qualified natural gas energy system, you must do all of the following:

  • File a compliance report with both the CRA and NRCan every year for the first 20 operating years of the system
  • File this report within 180 days after the end of each of these first 20 operating year and include the following information:
    • the actual emission intensity of the electrical energy produced by the system during the year
    • the gigawatt hours of electrical energy produced during the year
    • any shutdown time of the system during the year
    • for the fifth operating year, a report prepared by a qualified verification firm verifying the actual emission intensity of the system for each operating year in the compliance period
    • any information required in the guidelines published by NRCan

NRCan will review each of the compliance reports and the CRA, in consultation with NRCan, may determine or redetermine the actual emission intensity of the electrical energy produced.

Penalty for failure to file annual compliance report

If you do not file an annual compliance report within 180 days after the end of each of the first 20 operating years for a qualified natural gas energy system, you are liable to a penalty. The penalty will not exceed the total of all Clean Electricity ITCs you deducted for the system.

For each qualified natural gas energy system, the penalty is:

  • 4% of the total of all amounts of the Clean Electricity ITC for the qualified natural gas energy system deducted in tax years that ended before the deadline to file the compliance report
  • multiplied by the number of days during which the failure continues
  • divided by 365

Repaying credit amounts to the CRA

You may have to repay credit amounts you have already received.

Recovery tax on qualified natural gas energy systems

At the end of the compliance period of the natural gas energy system, where the average actual emission intensity of the electricity produced is greater than 68.5 tonnes of carbon dioxide per gigawatt hour of electrical energy, you will be liable to pay recovery tax on or before the balance-due day for the tax year in which the compliance period ends.

The recovery tax payable is determined by a formula applied to each qualified natural gas energy system.

The formula is A – B, where:

  • variable A is the total amount of the Clean Electricity ITCs received for qualified natural gas energy equipment that was part of the system
  • variable B is the total of all amounts, each of which can reasonably be considered to be the portion of any amount previously paid by the taxpayer for the equipment because of a recapture in respect of the equipment.

The recovery tax is zero if the average actual emission intensity of the qualified natural gas energy system over the compliance period is 68.5 tonnes of carbon dioxide per gigawatt hour of electrical energy produced or less.

NRCan will review each of the compliance reports and the CRA, in consultation with NRCan, may determine or redetermine the actual emission intensity of the electrical energy produced.

Interest on recovery tax

For the purpose of applying interest to an amount payable because of a recovery tax, your balance-due day for the tax year is deemed to be the balance-due day of the tax year for the related Clean Electricity ITC. This may create a liability for interest from the tax year in which the tax credit was originally claimed.

Recapture of the Clean Electricity ITC

There may be situations where you will have to calculate a recapture of the Clean Electricity ITC.

For more information, go to: If a recapture of your claim is required.

Actual emission intensity

Actual emission intensity means the emission intensity of a specified natural gas energy system of a qualifying entity, based on the actual carbon dioxide emissions from the production of electrical energy by the system.

Qualified verification firm

A qualified verification firm is a person or firm that is allowed to verify the emission intensity of a taxpayer’s natural gas energy system.

To qualify, it must meet all of the following conditions:

  • it must be:
    • an engineer, or an engineering firm that is registered and in good standing with a professional engineering association
      • that association must be legally authorized to regulate engineers in:
        • the province or territory where the energy system is located, or
        • if no such association exists there, any other Canadian jurisdiction with a professional association that regulates professional engineers, or
    • a verification body accredited and in good standing under the Clean Fuel Regulations
  • it must have appropriate insurance coverage
  • it must be independent from the taxpayer
  • it must not be employed by the taxpayer or the qualified validation firm for the system
  • it must deal with the taxpayer or the qualified validation firm for the system at arm’s length
  • it must meet the standards outlined in guidelines published by the Minister of Natural Resources
  • it must have expertise in auditing natural gas systems to demonstrate compliance with the Regulations Limiting Carbon Dioxide Emissions from Natural Gas-fired Generation of Electricity

Operating year

Operating year of a specified natural gas energy system, means each cumulative 365-day period, the first of which begins on the start-up date of a qualifying entity's specified natural gas energy system, disregarding any period during which the system is not operating.

Compliance period

Compliance period of a specified natural gas energy system of a taxpayer, means the period beginning on the start-up date of the system and ending on the last day of the fifth operating year of the system.

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2026-04-13