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Tax Benefits - Fit or MicroFIT Solar Program In Ontario

 

tax benefits microfit solar ontario A common question asked by those interested in the Ontario FIT or Microfit solar program is, "Do I have to pay tax on the revenue I earn?" The simple answer is yes. However, there is no need to panic over this because there are also tax benefits that help offset the additional income a solar system will generate. By opening up a business which can be done online in minutes and acquiring an HST number, there are major tax benefits that open up to the individual.

With an HST number in Ontario, all of the costs associated with the solar system installed on your property are subject to capital cost allowance (CCA). This means that the cost of the installation itself, insurance expenses or any maintenance costs that are directly attributed to your solar system are written off as expenses. The biggest expense is obviously the initial cost of purchasing and installing the solar array and it's components. This array is considered to be depreciating in value every year as determined by the CCA for clean energy generation under class 43.2. The depreciation rates are as follows; 25% for the first year and 50% for each of the following years. If done correctly, usually by an accountant, the owner of a $40 000 solar system for example will not have to pay income on electricity sold to your Local Distributor Company (LDC) for approximately six years!

The second tax benefit offered to those with an HST number is the ability to recoup the HST initially invested when purchasing the solar installation. As I'm sure you will notice this works out to be quite a large sum of money. Once you have an HST number you are expected to collect HST from your LDC. The remainder of HST collected from your LDC minus the HST you initially paid for your solar system is the amount you submit to the Canadian Revenue Agency.

It must be stressed that in order to make the above tax benefits applicable the name of the individual on the Ontario Power Authority (OPA) FIT or Microfit application must also be the name of the newly created business. This means that you must apply for your business as a Sole Proprietor. Therefore, you cannot name your business ABC Solar or anything other than the name of the sole proprietor.

At York Solar we want you to benefit as much as possible from your solar system but we have to recommend that you consult your accountant to confirm what tax implications are available to you. Ultimately we are a professional solar installation company not an accounting firm.

The above tax benefits have helped save our Ontario customers tens of thousands of dollars. It is our hope that this information will help guide you to make the best possible decisions before purchasing your solar system. We at York Solar have a "Customer First!" policy and hope that you would contact us if you have any questions or wish to request a free solar evaluation.

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