Bill C-269 Heat Recovery Tax Credit
C-269 An Act to Amend the Income Tax Act (Heat Recovery Tax Credit)
Bill Type: Private Member’s Bill
Bill Sponsor: Greg McLean (Calgary Centre)
What is this Bill trying to do?
Industrial processes — steel mills, cement plants, oil refineries, data centres — generate enormous amounts of waste heat that currently goes straight into the atmosphere. This Bill creates a 30% non-refundable tax credit for Canadian corporations that buy equipment to capture that waste heat and convert it into usable energy. The idea is straightforward: you're already burning the fuel, you might as well use what you're wasting.
Status: 2nd Reading — placed in Order of Precedence March 19, 2026. This Bill hasn't passed yet.
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WHO GAINS POWER
- The Minister of National Revenue gains administration authority over the new credit through prescribed forms and information requirements
- ⚠️ CRA gains discretion over what constitutes "all or substantially all" use for heat recovery — that threshold determines eligibility and is not defined in the Bill
- Corporations gain a 30% tax credit on qualifying equipment — a significant incentive for industrial energy efficiency investment
WHO LOSES POWER
- ⚠️ Only taxable Canadian corporations qualify — individuals, trusts, non-profits and foreign-owned subsidiaries are excluded regardless of whether they operate qualifying industrial processes
- ⚠️ Equipment whose primary function is energy generation does not qualify — the line between heat recovery equipment and energy generation equipment is not defined and will be determined by CRA interpretation
- Tax shelter investors are explicitly excluded — the credit cannot be used as a tax shelter investment vehicle
WHO GAINS MONEY
- Canadian corporations with industrial heat-generating operations gain a 30% credit on qualifying equipment purchases — steel, cement, oil and gas, mining, data centres and manufacturing are the primary beneficiaries
- Partnership members who are taxable Canadian corporations gain a proportional share of the credit through their partnership interest
- Equipment manufacturers and suppliers gain if the credit drives new capital investment in heat recovery technology
WHO LOSES MONEY
- The federal treasury loses revenue — 30% of the capital cost of every qualifying equipment purchase across all eligible industrial sectors
- ⚠️ The credit is non-refundable — corporations with little or no tax payable in a given year get no benefit. Smaller or less profitable industrial operators may not be able to use it
- ⚠️ Recapture applies within five years — if the equipment is converted to another use, exported or disposed of within five years, the full credit amount is clawed back. That's a significant risk for businesses whose operations change
THE CATCH
- ⚠️ Non-refundable means it only helps profitable corporations — a company losing money or breaking even gets nothing. The credit disproportionately benefits large, established industrial operators who already have significant tax liability
- ⚠️ "Qualifying heat recovery equipment" excludes equipment whose primary function is energy generation — in practice, many heat recovery systems do both simultaneously. CRA will draw that line and it will be contested
- ⚠️ No minimum efficiency standard is written into the Bill — any equipment that recovers heat and converts it to energy qualifies, regardless of how efficiently it does so
- The credit applies retroactively to the 2025 taxation year — corporations that already purchased qualifying equipment in 2025 can claim it immediately
- ⚠️ Partnership allocation rules are complex — limited partners are capped at their at-risk amount, allocations must be reasonable relative to capital invested and tiered partnership structures are explicitly addressed. This is fertile ground for aggressive tax planning
- No sunset clause — the credit runs indefinitely once enacted