Calculating the credit

Your Clean Hydrogen ITC is calculated based on the specified percentage of the capital cost to you of eligible clean hydrogen property that becomes available for use in the year.

If you are a taxable Canadian corporation who is a member of a partnership, your Clean Hydrogen ITC for a tax year also includes your reasonable share of the Clean Hydrogen ITC computed for the partnership for the tax year.

Your credit rate depends on whether you elect to meet the labour requirements.

Refer to: Avoid the reduced tax credit rate

The regular credit rate is between 15% and 40% of the capital cost of eligible clean hydrogen property that you acquired for use in a qualified clean hydrogen project, depending on the carbon intensity of the hydrogen to be produced by the project. Processes with the lowest carbon intensity would earn the highest rate. The credit would not apply when the carbon intensity is 4.0 kg of CO_2e per kg of hydrogen produced or more.

The Clean Hydrogen ITC is unavailable if an eligible clean hydrogen property (or an interest in a person or partnership with a direct or indirect interest in such property) is a tax shelter investment under section 143.2 of the Income Tax Act.

The table below provides the regular credit rates for eligible clean hydrogen property (other than clean ammonia equipment or certain other equipment used solely in connection with clean ammonia equipment) that is acquired after March 27, 2023, and that becomes available for use on or before December 31, 2034.

The credit does not apply for years after 2034.

The above chart does not apply to clean ammonia equipment. For clean ammonia equipment or certain other equipment used solely in connection with clean ammonia equipment that becomes available for use before 2034 the rate is 15%, if available for use in 2034 the rate is 7.5%, and 0% after 2034. These rates apply provided the expected carbon intensity of the clean hydrogen to be produced is less than 4. The credit rate also depends on whether you elect to meet the labour requirements.