For employees: What you need to know about labour requirements for clean economy ITCs

If an employer is claiming certain clean economy investment tax credits (ITCs) at the regular tax credit rate, they must elect to meet the labour requirements for those ITCs, where applicable.

This means that your employer may be required to pay you the prevailing wage.

What clean economy ITCs are

The clean economy ITCs are tax credits that employers can get for investment in Canada that supports the transition to net zero emissions.

These employers can claim regular or reduced tax credit rates for the clean economy ITCs:

• To claim at the regular tax credit rate, your employer must elect to meet the labour requirements for those clean economy ITCs
• To claim at the reduced tax credit rate, your employer does not need to meet the labour requirements for those clean economy ITCs

If you are interested in reading more details about these tax credits, refer to:

• Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit (ITC)
• Clean Technology (CT) Investment Tax Credit (ITC)
• Clean Hydrogen Investment Tax Credit (ITC)

What the labour requirements are

To claim the regular tax credit rate, an employer must elect to meet the labour requirements for the clean economy ITCs that are subject to the labour requirements.

The 2 aspects of the labour requirements are the prevailing wage requirements and the apprenticeship requirements.

To meet the prevailing wage requirements an employer must do all of the following:

• Pay covered workers the prevailing wage
• Communicate to employees that the workplace follows prevailing wage rules
• Tell employees how to report to the CRA if covered workers are not being paid the prevailing wage

Paying covered workers the prevailing wage

You are a covered worker, if you meet all of the following:

• Your work is in the preparation or installation of specified property at a designated work site
• Your work is manual or physical in nature

• • You are an employee of an employer that is claiming a clean economy ITC

  • You are an employee of a contractor or subcontractor hired by the claimant who is claiming a clean economy ITC

• You are not an administrative, clerical or executive employee
• You are not a business visitor to Canada (Find out if you're a business visitor)

Being paid the prevailing wage means:

• You are paid according to the terms of an eligible collective agreement that applies to your job

• You receive at least the regular wages (without taking into account overtime) and benefits (means vacation, pension, health and welfare benefits) outlined in the eligible collective agreement that best matches your experience, duties, and the location of the designated worksite, calculated per hour or similar basis

Communicating to covered workers that the workplace follows prevailing wage rules

The employer claiming the credit must communicate that it follows prevailing wage rules by indicating that the work site is subject to prevailing wage requirements in relation to covered workers.

The employer must communicate this to you by:

• Posting a visible notice at the work site

• Sending a notice through electronic means

This communication should also include an easy to understand explanation of what the prevailing wage means for you.

The communication must also tell you how to report to the CRA if you’re not being paid the prevailing wage.

If you are interested in reading more details about the labour requirements, refer to: Avoid the reduced tax credit rate for clean economy ITCs

How to report to the CRA if you are a covered worker and are not being paid the prevailing wage

An employer does not need to meet the labour requirements if they are claiming a reduced rate.

If you are a covered worker and your employer is claiming a regular tax credit rate but is not paying the prevailing wage, you can report non-compliance.

To report non-compliance, refer to: Report suspected tax cheating in Canada

Contact us

Call the CRA if you have questions about the labour requirements.