3 October 2025 External T.I. 2025-1075051E5 - Clean Tech ITC: Class 56 equipment

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Could the property described in the hypothetical facts qualify as clean technology property, despite the fact that it runs on rails and is powered by an attached electrical cable?

Position: In our view, these facts about the property do not prevent it from being considered to be automotive equipment that is fully electric. However, whether a particular property would qualify as clean technology property is a question of fact that can only be answered based on all the facts and circumstances of a particular situation.

Reasons: Our conclusion is based on a textual, contextual and purposive analysis of the legislation and an application of the legislation to the hypothetical facts presented herein.

XXXXXXXXXX									Nicki Verlinden
										2025-107505

October 3, 2025

Dear XXXXXXXXXX,

Re: Zero-emission automotive equipment – XXXXXXXXXX

This letter is in reply to your request for a technical interpretation, dated August 7, 2025. You asked us for our views on whether a particular property (described in more detail below) could qualify as a clean technology property, defined in subsection 127.45(1) of the Income Tax Act (Canada) (footnote 1) (“Act”).

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

Hypothetical Facts

• The taxpayer is a taxable Canadian corporation (footnote 2) and operates its business in XXXXXXXXXX, Canada.
• The taxpayer intends to acquire a depreciable property (footnote 3) from an arm’s length person for use in its business.
• The following is a description of the depreciable property that the taxpayer intends to acquire:

• XXXXXXXXXX (the “Property”);
• The Property will be used by the taxpayer to off-load raw materials from XXXXXXXXXX and then pile them XXXXXXXXXX on the ground near the processing plant for further processing;
• The Property will be purchased as a single property that mainly consists of a XXXXXXXXXX that will exclusively move along rails in its operation (XXXXXXXXXX);
• The Property does not include the rails;
• The Property moves XXXXXXXXXX along the rails in its ongoing operation;
• The Property is self-propelled by its fully-electric motors;
• The primary electric motor drives the propulsion and runs the hydraulic pumps that operate other equipment (XXXXXXXXXX.)
• The electricity is supplied to the Property by an attached tether cable;
• The Property is not designed or adapted to operate on roads or highways, nor is it licensed to do so.
• The Property will be situated in Canada and is intended for use exclusively in Canada.
• The Property will not be used, or acquired for use or lease, for any purpose whatever before it is acquired by the taxpayer.
• The Property will be acquired and available for use before 2028.

Response

Clean technology property is defined in subsection 127.45(1) of the Act, and the relevant portion of that definition is:

clean technology property means property

(a) situated in Canada … and intended for use exclusively in Canada;

(b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

(c) n/a – deals with leasing; and

(d) that is

(iv) a non-road zero-emission vehicle described in Class 56 in Schedule II to the Income Tax Regulations […];

Class 56 applies to, among other things, “automotive equipment (other than a motor vehicle) that is fully electric or powered by hydrogen”, provided various other requirements of that class have been met.

The Property described herein appears to meet the requirements to be a clean technology property, pursuant to subparagraph 127.45(1)(d)(iv), based on the hypothetical facts, above. In particular, the fact that the Property runs on rails and that its electricity is supplied by a tethered cable would not, in our view, prevent the Property from being considered to be automotive equipment that is fully electric. However, whether a particular property would qualify as clean technology property is a question of fact that can only be answered based on all the facts and circumstances of a particular situation.

We trust these comments will be of assistance.

Yours truly,

Kimberley Wharram
Manager, Resources Section
for Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 R.S.C. 1985, c. 1 (5th Supp.), as amended.

2 Defined in subsection 89(1) of the Act.

3 Defined in subsection 13(21) of the Act.