Class 43.1 and 43.2 (clean energy equipment)

Buyers of energy, solar or waste-heat businesses meet these classes when they allocate price to equipment. Class 43.1’s first paragraphs cover property, other than reconditioned or remanufactured equipment, that would otherwise fall in Class 1, 2, 8 or 48, or in Class 17 because of paragraph (a.1) of that class; its later paragraphs cover such property that would otherwise be in another class. The CRA says most Class 43.1 equipment also qualifies under Class 43.2, and that Class 43.2 property must be acquired before a cut-off date. See what purchase price allocation is.

What the class text covers

The class lists electrical generating equipment, equipment generating both electrical and heat energy (other than fuel cell equipment), and heat recovery equipment used primarily to conserve energy, or reduce the need to acquire energy, by extracting for reuse thermal waste generated by that equipment. Its other paragraphs list items such as active solar heating equipment, fixed location wind energy conversion systems and fixed location photovoltaic equipment. A listed item still has to meet the class’s conditions. Some of this property also relates to the clean technology investment tax credit.

What to ask

• The seller’s tax records showing which assets are in Class 43.1 or 43.2, and under which paragraph
• The acquisition date of each item, since Class 43.2 turns on it
• Whether the buyer’s accountant agrees with the class before the price allocation is fixed