Schedule 78, Carbon Capture, Utilization and Storage Investment Tax Credit

In Part 1, CCUS ITC, you must manually enter all the information in columns 100 to 135, in columns 145 and 165 as well as on line 185 to calculate the CCUS ITC for each qualified CCUS expenditure. To correctly calculate the specified percentage on line 155 of Part 1, you must select the type of CCUS expenditure from the drop-down list in column 110 and enter a date in the custom column Enter the date on which the qualified CCUS expenditures were incurred, which has been added on screen only. This column is also used to calculate the amount on lines 170 and 185.

However, if code 4, Carbon capture, utilization and storage (Schedule 78), is selected in the Investment tax credit code drop-down list and if an NRCan project code is selected in the If the property is related to code 4, Carbon capture, utilization and storage (Schedule 78) of the Investment tax credit code drop-down list above, specify which NRCan project code (line 100) of Schedule 78 the property is related to in order to complete the data transfer field of a copy of Schedule 8 WORKCHART ADD (Jump Code: 8 WORKCHART ADD), the values in the Class, Description, Acquisition date and Adjusted capital cost fields in the Information relating to the property – CCA other than classes 10.1, 13 and 14 and Addition sections of this copy will then be transferred to columns 105 and 125 as well as to custom column Enter the date on which the qualified CCUS expenditures were incurred of a new row in Part 1 of the corresponding copy of Schedule 78.

The CCUS ITC rate for qualified CCUS expenditures incurred after December 31, 2021, and before January 1, 2031, is:

60% for carbon capture (ambient air);
50% for carbon capture (other);
37.5% for carbon transportation;
37.5% for carbon storage; or
37.5% for carbon use.

You must elect to meet the labour requirements for wage requirements and apprenticeship requirements in order to benefit from the regular credit rate (percentage determined on line 155 of Part 1) for each of the designated work sites in column 165 of Part 1. If you meet the labour requirements, you must complete Part 2, Attestation and election to meet labour requirements. However, if you choose not to meet the labour requirements, the percentage determined on line 155 of Part 1 will be reduced by 10 percentage points (reduced tax credit rate) for specified property prepared or installed after November 27, 2023, and you will not need to complete Part 3. For more details on labour requirements, see section 127.46 ITA.

In Part 4, Part XII.7 tax, the table for each project period and lines D to 410 are applied to recover some or all of the cumulative CCUS development tax credit and the CCUS refurbishment tax credit in certain circumstances where the actual eligible use percentage is less than the projected eligible use percentage. Note that when you select another period from the drop-down list on line 001, the percentages on lines 002 and 003 will not be retained. Also, on screen only, line I has been separated into two custom lines: lines 1, All the CCUS refurbishment tax credits for the current tax year, and 2, All the CCUS refurbishment tax credits for the previous tax years. Finally, if you dispose of the property or export it from Canada during the total CCUS period review (see paragraph 211.92(9)(b) and subsection 211.92(10) ITA), you must complete the table for lines 415 to 450 as well as the custom column Select the type of disposition that relates to the amount on line 445 that has been added, on screen only, to be able to correctly calculate the amounts on lines 455 and 460.

In addition, this schedule applies when the corporation is resident in Canada and at least one of the following conditions is met:

a value is calculated on line A of Part 1;
a value is calculated on line 330 of Part 3; or
a value is calculated on line L of Part 4.

When rolling forward a client file, the data entered on lines 100, 101, 102 and 103 above Part 1 and the values entered on lines 001, 002 and 003 in Part 4 will be retained. In addition, in Part 1, the amount on line 170 will be transferred to line 175. Finally, the amount on line 185 in Part 1 will be added to the amount on the custom line All the CCUS refurbishment tax credits for the previous tax years, and the result will be transferred to the custom line All the CCUS refurbishment tax credits for the previous tax years for a cumulative total of the CCUS refurbishment tax credits for all previous years.