Ask the Expert Preparing for the EWRB deadline

Air-source heat pumps added to tax break list

Air-source heat pumps have been added to the list of clean energy equipment that qualifies for special tax treatment through Canada’s accelerated capital cost allowance (CCA) program. Businesses that acquire qualifying systems for indoor space heating/cooling or water heating between federal budget day on April 7, 2022 and December 31, 2023 will be eligible to deduct the full value in the first year of ownership.

Other clean energy equipment — which is designated in class 43.1 or 43.2 for CCA purposes — already eligible for accelerated deductions includes: groundsource heat pumps, including those used to heat swimming pools; active solar heating equipment; heat recovery equipment; photovoltaic electrical generation equipment; geothermal energy equipment; equipment related to district energy systems; electrical energy storage equipment; and electric vehicle charging equipment.

As announced in the newly released 2022 federal budget, the following components associated with air-source heat pumps can be claimed: refrigerant piping; energy conversion equipment; thermal energy storage equipment; and control equipment and equipment designed to enable the system to interface with other heating and cooling equipment. Purchasers may also be able to be claim feasibility studies, engineering and design costs as allowable Canadian Renewable and Conservation Expenses (CRCE), which could claimed in the year incurred, carried forward or transferred to investors.

“As a means to displace the use of fossil fuels for heating, or of providing a more efficient means of heating with electricity (e.g., compared to electric baseboard heaters), airsource heat pumps can play a role in reducing emissions of greenhouse gases and air pollutants associated with heating buildings in Canada,” the budget document states.

Concurrently, manufacturers of air-source heat pumps will be eligible for new tax credits, which were announced in the 2021 federal budget, but are available to claimants for the first time in 2022. That program provides a 50 per cent reduction in the corporate tax or small business tax rate until 2028 for manufacturers of designated zero-emission technologies, with a continued tax credit at incrementally lower rates in the 2029-2031 period.

The budget document states that adding the new category to the original list of designated manufacturers — including those producing solar, wind, hydroelectric and geothermal equipment, as well as equipment related to ground source heat pumps, electrical storage of renewable energy, and electric vehicle charging systems — will “support job creation and growth in clean technology manufacturing in Canada”.

It’s estimated the Canadian government will forego about $53 million in tax revenue over five years by extending the two measures to air-source heat pumps. Boardwalk REIT announced it has acquired two apartment properties located in Canmore, AB, and Brampton, ON, for a combined purchase price of $117.5 million. According to a recent operational update, the new portfolio strengthens and expands Boardwalk’s presence in two significantly undersupplied housing markets while providing immediate accretion to Unitholders.

The transaction closed on March 30, 2022 and was funded with a combination of existing liquidity and low-cost mortgage financing. The 148-unit property in Canmore, known as Peak Estates, consists of three A-class, four-storey buildings constructed in 2018. Boardwalk REIT currently owns Elk Valley Estates and Mountainview Estates in the nearby town of Banff, bringing its portfolio in the region to over 300 units.

Ardglen Place in Brampton totals 152 townhouse units and offers “significant value-add potential” for the Trust. The property features large unit sizes and offers residents desirable low-density housing in the rapidly growing Peel Region. According to Boardwalk, it now has a solid operational foothold in the area ahead of the completion of Tower 1 of the Trust’s 45 Railroad development in Brampton, which is expected to come online in Q4 2022.

As part of the operational update, Sam Kolias, Chairman and Chief Executive Officer of Boardwalk commented: “After a slower January and first two weeks of February, we have seen a strong increase in rental traffic in March with higher occupancy and lower availability as we head into the strong spring leasing season.”

Boardwalk REIT acquires two apartment properties

Modernizing payments for Canada’s commercial property industry

Canadian property managers have a lot to gain from making payments faster, easier, and more transparent. In a post-pandemic economy, many Canadians are reducing their use of cash as a payment method and are relying instead on digital payments. In fact, a recent Interac survey revealed that two thirds of Canadians believe businesses that fail to adapt in order to allow digital payments will struggle.

The demand for digital payment options from businesses will only increase and property managers will need to accommodate this shift in consumer behaviour. With every dollar counting more than ever before given the challenges faced by businesses during the pandemic, effi cient ways of paying and managing fi nances in ways that improve cash fl ow is now paramount. Improvements to accounts payable, accounts receivable, and methods of payment cannot be overlooked in this recovery-focused environment.

Pre-pandemic, day-to-day fi nancial management often involved processes that were paper-based, cheque-driven, and manual. These are typically slower and less effi cient ways of working and require businesses to spend valuable resources processing and reconciling payments. The pandemic, alongside changing consumer preferences, has naturally reinforced the need for digitization and moved businesses to lessen their reliance on manual processes to boost overall operational effi ciency. Eighty-three per cent of fi nance professionals surveyed by Interac affi rm this notion, saying that applying digital transformation to their function is now a priority .

These needs are fuelling demand for innovative business payment solutions, such as Interac e-Transfer® for Business. As an enhancement of the existing Interac e-Transfer service, new features were built to meet the needs of Canadian businesses through higher transaction limits, fast money transfers with instant confi rmation and rich remittance data, allowing businesses to reconcile

transactions with less paperwork. In other words, it can help streamline accounting processes and accelerate a paperless offi ce strategy.

For a property manager or landlord, this could mean being able to accept or request payments directly from tenants with immediate access to funds, paying contractors and invoices for work specifi c to the property with greater ease and retaining payment confi rmations. Further, property managers and landlords could send a reminder for rent payment via request-to-pay capability and easily reimburse tenants for costs incurred on behalf of the property manager or for payment returns.

Receiving payments instantly in this way can also be a game changer if a manager is largely reliant on cheques, eliminating any uncertainty around when one will arrive in the mail or whether it will clear. With Interac e-Transfer for Business, property managers can receive payment instantly, reducing the number of cheques and cash they receive, eliminating the risk of late payments, and gain easy visibility into what the payments are for using structured data.

Eight in 10 (80 per cent) business decision makers surveyed agree that moving from traditional payment options to digital ones will be essential to post-pandemic growth . Assessing how a business can revamp its payment processes and fi nancial management to become more effi cient and effective with tools like Interac e-Transfer for Business can help to equip the commercial property industry as it embarks upon growth and recovery plans.

Those interested in using the solution are invited to learn more by visiting Interac.ca/business, In The Know and to discuss the offering with their fi nancial institution.

Interac and Interac e-Transfer are registered trademarks of Interac Corp..

(1)Interac commissioned Hill+Knowlton Strategies to conduct a national survey of adult Canadians. A total of 1,000 adult residents of Canada were surveyed online in April 2021. The sample was randomly drawn from a panel of potential survey respondents. An associated margin of error for a probability-based sample of this size would be ±2.5%, 19 times out of 20. (2)Interac commissioned Phase 5 Consulting to conduct an online survey of 152 fi nancial decision-makers in Canadian midsized businesses with 100-499 employees. Participants were recruited via an online research panel. Fieldwork was conducted in English and French in May 2021. (3)Interac participated in RFi Group’s online commercial banking and payments syndicated survey of decision makers at 363 commercial enterprises with revenues between $10M and $100M. Fieldwork was conducted in English and French in June 2021. Note: Finance transformation describes any strategic initiative meant to create new opportunities for the fi nance function to add value to the business and align with overall company strategy.