CRA concludes that the rules for avoiding recapture of clean energy ITCs on related corporation transfers can apply to successive such transfers

Aco acquired a clean technology property and properly claimed the clean technology investment tax credit, then transferred the property on an s. 85(1) rollover basis to a related taxable Canadian corporation (Bco) which, in turn, transferred the property on an s. 85(1) rollover basis to yet another related taxable Canadian corporation (Cco), which then sold the property to an unrelated third-party purchaser.

CRA confirmed that the first transfer, by virtue inter alia of being a related corporation transfer, would not, by virtue of subsection 127.45(13), be subject to the rule for recapture of ITCs under subsections 127.45(11) and (12). On a proactive reading of the rule in s. 127.45(14) requiring that the rule in s. 127(34) be read “with such modifications as the circumstances require,” CRA also concluded that the second related corporation transfer was not subject to recapture.

The recapture instead did not occur until the sale to the third party.

Neal Armstrong. Summary of 27 January 2026 External T.I. 2025-1080051E5 under s. 127.45(14).