Nov 22, 2023

monitoring and control equipment used solely to supportEligible Industrial Production Equipment; a building or other structure all or substantially all of whichis used, or to be used, for the installation or operation ofEligible Industrial Production Equipment or its monitoring andcontrol equipment; or property that is used solely to convert property into any ofthe foregoing or refurbish any of the foregoing. In the case of property acquired before the first day ofcommercial operations of the project, NR Can must verify that theproperty meets the requirements to be included in computingQualified Carbon Use Expenditures. Eligible Industrial Production Equipment must be used solely forusing carbon dioxide in industrial production. There is no abilityto prorate between eligible and ineligible uses. Special Rules Applicable to Determining Capital Cost and Amountof Qualified CCUS Expenditures The capital cost of Class 57 or 58 property is determinedwithout reference to subsections 13(7.1) and (7.4) (allowing CCUSTax Credits to be disregarded in computing capital cost) but isreduced by the amount of any "non-government assistance"(as defined in subsection 127(9)) that, at the time of the filingof the taxpayer's tax return, the taxpayer has received, isentitled to receive or can reasonably be expected to receive inrespect of the property. If, in a particular taxation year, thetaxpayer repays (or has not received and can no longer reasonablybe expected to receive) non-government assistance that reduced thecapital cost of property, the amount repaid (or no longer expectedto be received) is deemed to be added to the cost to the taxpayerof a property acquired in the particular year for the purpose ofdetermining the taxpayer's CCUS Tax Credit for the year. The amount of a qualified CCUS expenditure of a taxpayer doesnot include: the amount of any expenditure incurred before 2022 or after2040; the amount of any expenditure incurred to acquire property thatwas used for any purpose by any person or partnership before it wasacquired by the taxpayer (i.e., the CCUS Tax Credit is onlyavailable in respect of new property); the amount of any expenditure for which a CCUS Tax Credit waspreviously deducted by any person or for which a CTI Tax Credit isclaimed; the amount of any expenditure incurred for a "preliminaryCCUS work activity" which are activities that are preliminaryto the acquisition, construction, fabrication or installation ofClass 57 or Class 58 property in respect of a CCUS project.Examples of such activities are obtaining permits or regulatoryapprovals, performing design or engineering work includingfront-end engineering design studies (or equivalent studies asdetermined by NR Can), conducting feasibility studies orpre-feasibility studies (or equivalent studies as determined by NRCan), conducting environmental assessments, and clearing orexcavating land; any amount added to the cost of a property under section 21(which allows a taxpayer to capitalize certain interest payable onmoney borrowed to acquire depreciable property or on the unpaidbalance of the purchase price of depreciable property); the amount of any expenditure to acquire a property that thetaxpayer disposes of (except where the taxpayer and the purchasermake the election under Part XII.7 discussed below) or exports fromCanada in the same taxation year as the taxpayer acquired theproperty; the amount of any expenditure that is unpaid on the day that is180 days after the end of the taxation year in which theexpenditure is otherwise incurred, provided that the expenditurewill be deemed to be incurred at the time it is paid (effectivelydenying the CCUS Tax Credit in respect of such an unpaid amountuntil it is paid); or the amount of an expenditure incurred for a service rendered bya non-arm's length person is limited to the lesser of theamount of the expenditure otherwise incurred by the taxpayer and,simplified, the cost to the supplier of rendering the particularservice. Calculation of the Credit Amount A taxpayer's CCUS Tax Credit for a taxation year is composedof two amounts: the amount by which the taxpayer's "cumulative CCUSdevelopment tax credit" exceeds the taxpayer's cumulativeCCUS development tax credit for the immediately preceding taxationyear; and the amount of the taxpayer's CCUS refurbishment tax creditfor the year. A taxpayer's cumulative CCUS development tax credit for aparticular taxation year is the amount of the taxpayer'squalified CCUS expenditures (i.e., Qualified Carbon CaptureExpenditures, Qualified Carbon Transportation Expenditures,Qualified Carbon Storage Expenditures and Qualified Carbon UseExpenditures) incurred prior to the first day of commercialoperations of the CCUS project, whether in the year or in a prioryear, multiplied by the applicable "specifiedpercentage". The August 4 Proposals contemplate that ataxpayer maintains a single cumulative CCUS development tax creditaccount for all qualified CCUS projects rather than separateproject-specific accounts. The applicable specified percentage depends on the type ofexpenditure incurred and when it is incurred. Between January 1,2022, and December 31, 2030, the specified percentages are asfollows: 60% for Qualified Carbon Capture Expenditures incurred tocapture carbon from the ambient air; 50% for Qualified Carbon Capture Expenditures related toprojects to capture carbon otherwise from the ambient air; and 5% for Qualified Carbon Transportation Expenditures, QualifiedCarbon Storage Expenditures and Qualified Carbon UseExpenditures. For the period from January 1, 2031 to December 31, 2040, thespecified percentages are one-half of those described above. Nocredit is available for expenditures incurred after December 31,2040. A taxpayer's CCUS refurbishment tax credit for a taxationyear captures qualified CCUS expenditures incurred after the firstday of commercial operations and in the total CCUS project reviewperiod. It is the total of all qualified CCUS expenditures incurredin the year and during the total CCUS project review periodmultiplied by the applicable specified percentage. However, thetotal qualified CCUS expenditures eligible for the refurbishmenttax credit are capped at 10% of the total qualified CCUSexpenditures incurred by the taxpayer before the first day ofcommercial operations. As discussed in our blog on the Labour Requirements  here , if the taxpayer does not elect tosatisfy the Labour Requirements, the applicable specifiedpercentage will be reduced by 10%. Claiming the CCUS Tax Credit To claim a CCUS Tax Credit for a taxation year, a qualifyingtaxpayer must file a prescribed form on or before the date its taxreturn is due for the year. Unlike the CTI Tax Credit, the August 4Proposals do not require the prescribed form to be filed with thetaxpayer's income tax return for the year. If the prescribedform is not filed within one year of the filing due date for thetaxation year, no CCUS Tax Credit will be available for that year.The August 4 Proposals expressly provide that the Minister does nothave the discretion under subsection 220(2.1) to waive therequirement. If the qualifying taxpayer files the prescribed form asrequired, the taxpayer is deemed to have paid on its balance-dueday for the year on account of its tax payable under Part I of theTax Act for the year an amount equal to the taxpayer's CCUS TaxCredit. To the extent that the CCUS Tax Credit and any otherrefundable credits and instalment payments exceed thetaxpayer's tax otherwise payable under Part I for the year, thetaxpayer is entitled to a refund. For certain provisions of the Tax Act that apply in relation toan amount deducted in computing tax payable (the CCUS Tax Credit,paragraph 12(1)(t), subsection 13(7.1), the description of I in thedefinition undepreciated capital cost in subsection 13(21),subsections 53(2) and 96(2.1), section 127.45 (relating to the CTITax Credit) and Part XII.7), an amount equal to the taxpayer'sCCUS Tax Credit is deemed to have been deducted from thetaxpayer's tax otherwise payable under Part I of the TaxAct. A CCUS Tax Credit claimed by the taxpayer in a taxation year inrespect of the acquisition of a clean technology property in thetaxation year will normally reduce the capital cost of the propertyin the following taxation year under paragraph 13(7.1)(e). However,if the property is disposed of before the CCUS Tax Credit isclaimed, the "undepreciated capital cost" (UCC) of theclass in which the property was included will be reduced by theamount of the CCUS Tax Credit for subsequent taxation years. Partnerships Only taxable Canadian corporations may claim the CCUS TaxCredit. However, the CCUS Tax Credit may be claimed by a partner of apartnership in respect of qualified CCUS expenditures made by thepartnership to acquire property in respect of qualified CCUSprojects if the partner is a taxable Canadian corporation. In general, where a CCUS Tax Credit would be determined inrespect of a partnership if the partnership were a taxable Canadiancorporation (i.e., because the partnership made a qualified CCUSexpenditure in respect of a qualified CCUS project) the portion ofthe amount of the CCUS Tax Credit that can reasonably be consideredto be a partner's share of the credit is added in computing thepartner's CCUS Tax Credit at the end of the particular year ifthe partner is a taxable Canadian corporation. The amount so addedwill reduce the adjusted cost base of the partnership interest tothe partner. A new anti-avoidance addresses the allocation of the CCUS TaxCredit (and CTI Tax Credit) by a partnership. It provides that,where a partner's share of the CCUS Tax Credit (or CTI TaxCredit) is not reasonable in the circumstances having regard to thecapital invested in or work performed for the partnership by thepartners or such other factors as may be relevant, that shareshall, notwithstanding any agreement, be deemed to be the amountthat is reasonable in the circumstances. It is not clear that the capital cost of property acquired bythe partnership is reduced by CCUS Tax Credits claimed by thepartners. In particular, subsection 127(12), which is intended toachieve the former reduction under subsection 13(7.1) forinvestment tax credits, is not made applicable to the CCUS TaxCredit. Limited Partnerships Subsections 127(8.1) to (8.5) apply to determine the amount ofinvestment tax credits generated by expenditures of a limitedpartnership to be allocated to the partners. These rules are toapply to the determination of the amount of a CCUS Tax Credit of ataxpayer who is a member of a limited partnership with suchmodifications as the circumstances require. In brief, under these rules, the amount of the CCUS Tax Creditthat may be allocated to a particular limited partner is limited tothe lesser of (i) the amount of the CCUS Tax Credit considered toarise because of the expenditure of the limited partner's"expenditure base" (as defined in subsection 127(8.2)),and (ii) the limited partner's "at-risk amount" (asdetermined under subsection 96(2.2)) at the end of the particularfiscal period. A limited partner's "expenditure base"is the lesser of two amounts. The first amount reflects amountsinvested in the partnership by the limited partner. The secondamount is a proportion of the lesser of two amounts: (i) thequalified CCUS expenditures incurred by the partnership during thefiscal period, and (ii) the total amounts invested in thepartnership by all limited partners. The relevant proportion is theproportion that amounts invested in the partnership by theparticular limited partner is of the total amounts invested in thepartnership by all limited partners. To the extent that CCUS TaxCredits can't be allocated to limited partners as a result ofsuch limitations, they may generally be allocated to the generalpartner. The rules are complex and the foregoing is a high levelsummary only. A key take away is that the cost of clean technologyproperty financed with money borrowed by the limited partnershipwill generally not generate additional CCUS Tax Credits for limitedpartners. Tax Shelters and Tax Shelter Investments If any property used in a qualifiedCCUS project, or any interest in aperson or partnership with a direct or indirect interest in anyproperty used in the qualified CCUS project, is a "tax shelterinvestment" for the purpose of section 143.2, the CCUS TaxCredit is denied in respect the project. This can be contrastedwith the analogous rule in the context of the CTI Tax Credit whichwould deny the CTI Tax Credit in respect of a particular propertyif the property were a tax shelter investment but would not denythe CTI Tax Credit in respect of otherwise eligible properties inthe project. Note that all investments that are "tax shelters" asdefined in section 237.1 are included within the definition of"tax shelter investment". Recovery Tax As described above, the amount of a taxpayer's eligibleexpenditure included in Qualified Carbon Capture Expenditures orQualified Carbon Transportation Expenditures takes into account theprojected eligible use percentage for each project period thatincludes or begins after the time of the expenditure. In thesimplest case, where expenditures are made before commercialoperations or in the first project period and 100% eligible use isprojected for all project periods, the full amount of the relevantexpenditures will be Qualified Carbon Capture Expenditures orQualified Carbon Transportation Expenditures. The August 4 Proposals will add Part XII.7 to the Tax Act toprovide a tax to recover some or all of the CCUS Tax Credit incertain circumstances where the "actual eligible usepercentage" is less than the projected eligible usepercentage. "Actual eligible use percentage" is theproportion, expressed as a percentage, that (i) the quantity ofcaptured carbon that the CCUS project supported for storage or usein eligible uses during the period, is of (ii) the total quantityof captured carbon that the CCUS project supported for storage oruse in both eligible uses and ineligible uses during the period.Actual eligible use percentage could be less than projectedeligible use percentage for example where a taxpayer that projected100% eligible use begins to use some of the captured carbon inenhanced oil recovery. As discussed below, in general terms, once a CCUS project beginscommercial operations, an annual report (Eligible Use Report) formust be filed a taxpayer who deducted a CCUS Tax Credit in respectof the project stating (i) the actual amount of carbon capturedduring the calendar year for storage or use in eligible uses; and(ii) the total quantity of captured carbon during that calendaryear that supported storage or use in both eligible uses andineligible uses. Until all required returns for calendar years in aproject period are filed, the actual eligible use percentage forthe project period in respect of the CCUS project is deemed to benil. The recovery tax rules are complex and only a high level summaryis provided below. Special rules apply to partners of a partnershipwhere expenditures of the partnership gave rise to CCUS Tax Creditsof one or more partners. In general, Part XII.7 provides for a tax (Recovery Tax) in 5situations: If, in the taxation year that the qualified CCUS project beginscommercial operations, or in any preceding year, the taxpayer's"cumulative CCUS development tax credit" at the end ofthe particular year is less than the taxpayer's"cumulative CCUS development tax credit" at the end ofthe year immediately before the particular year, a tax is payableunder Part XII.7 equal to the difference. It is expected that thiswould arise if, after expenditures have been incurred but beforecommercial operation begins, the taxpayer's project plan wererevised to incorporate a lower projected eligible usepercentage. At the end of each of the four project periods that comprise aqualified CCUS project's total CCUS project review period, theprojected eligible use percentage of the qualified CCUS project forthe relevant project period must be compared with the actualeligible use percentage for the project period. If the projectedeligible use percentage for the project period exceeds the actualeligible use percentage for the project period by more than 5%,each taxpayer that deducted a CCUS Tax Credit in respect of theCCUS project must pay a tax for the taxation year that includes thelast day of the project period under Part XII.7 (DevelopmentCredits Recovery Amount) equal to the amount by which thetaxpayer's cumulative CCUS development tax credit for thetaxation year that included the first day of commercial operationsexceeds the amount (Development Credits Recalculated Amount) thatwould have been the taxpayer's cumulative CCUS development taxcredit for that taxation year if the actual eligible use percentagefor the particular project period had been used to calculate thatamount instead of the projected eligible use percentage for theparticular project period. As described above, a taxpayer's CCUS refurbishment taxcredit for a taxation year captures qualified CCUS expendituresincurred after the first day of commercial operations and in thetotal CCUS project review period. If the projected eligible usepercentage for a project period of a qualified CCUS project exceedsthe actual eligible use percentage for the project period by morethan 5%, an analogous calculation to that described above inrelation to the cumulative CCUS development tax credit is made todetermine the amount of the applicable difference in thetaxpayer's CCUS refurbishment tax credit (Refurbishment CreditsRecalculated Amount) and applicable amount of Part XII.7 tax(Refurbishment Credits Recovery Amount) for each taxpayer thatdeducted a CCUS tax credit in respect of the CCUS project. In order for a CCUS project to be a qualified CCUS project, itsprojected eligible use percentage must generally be at least 10%throughout its total CCUS project review period. If the actualeligible use percentage of the CCUS project falls below 10% for acalendar year (subject to a special rule applicable to a projectthat begins commercial operations after September in a calendaryear) included in the CCUS project's total CCUS project reviewperiod, the actual eligible use percentage for the project periodthat includes such calendar year (Trigger Period) and for eachsubsequent project period is deemed to be nil. For the purposes ofcalculating the Development Credits Recovery Amount andRefurbishment Credits Recovery Amount, the Development CreditsRecalculated Amount and Refurbishment Credits Recalculated Amountare determined as if the projected eligible use percentage were nilfor the Trigger Period and each subsequent project period. Thus, ifthe actual eligible use percentage of the CCUS project were to fallbelow 10% in the first project period, 100% of the taxpayer'sCCUS Tax Credits claimed in respect of the project would berepayable as Recovery Tax. Tax under Part XII.7 may also be payable if the taxpayerdisposes of or exports from Canada property the acquisition ofwhich gave rise to, or which would otherwise have given rise to, aCCUS development tax credit or CCUS refurbishment tax credit. Seebelow under the heading "Disposition or Export ofProperty". A discretionary relieving rule may apply if the actual eligibleuse percentage for a qualified CCUS project during a project periodis significantly reduced due to extraordinary circumstances,for bona fide reasons outside the control of thetaxpayer and of each person or partnership that does not deal atarm's length with the taxpayer. The taxpayer must apply forrelief in writing to the Minister of National Revenue on or beforethe taxpayer's filing-due date for the year and relief may begranted if the Minister is satisfied that the taxpayer has takenall reasonable steps to attempt to rectify the extraordinarycircumstances, and that it is appropriate to grant relief, havingregard to all the circumstances. If granted, no Development CreditsRecovery Amount or Refurbishment Credits Recovery Amount will bepayable by the taxpayer in respect of the project period if theextraordinary circumstances apply to all or substantially all ofthe project period or, if that threshold is not met, the portion ofthe project period during which the project is affected byextraordinary circumstances is disregarded for the purpose ofcalculating the actual eligible use percentage for the projectperiod. A relieving rule also applies in the case of a project that isshut down for all or part of a relevant project period. If theproject is inoperative for all or substantially all of the period,no Development Credits Recovery Amount or Refurbishment CreditsRecovery Amount is payable by the taxpayer in respect of thatproject period. Otherwise, for the purpose of calculating theactual eligible use percentage for the project period, the portionof the project period during which the project is inoperative isdisregarded. Disposition or Export of Property If a taxpayer disposes of or exports from Canada, in aparticular taxation year, a property for which the taxpayer'squalified CCUS expenditure resulted in the determination of acumulative CCUS development tax credit for a previous taxation yearor would otherwise have resulted in a cumulative CCUS developmenttax credit for the particular taxation year, the relevant creditmay be denied or recovered: If the disposition or export occurs before the total CCUSproject review period (i.e., before the first day of commercialoperations) the taxpayer's expenditure in respect of theproperty is deemed not to be a qualified CCUS expenditure for thepurpose of determining the taxpayer's cumulative CCUSdevelopment tax credit for the particular year and any subsequenttaxation years. If the disposition or export occurs in the sameyear that the expenditure is made, the expenditure will not betaken into account in computing the taxpayer's cumulative CCUSdevelopment tax credit for the particular year. If the expenditurewas incurred in a prior year, the taxpayer's cumulative CCUSdevelopment tax credit for the current year will be reduced whichmay result in the balance being less than that at the end of thepreceding year giving rise to Part XII.7 tax equal to theexcess. If the disposition or export occurs during the total CCUSproject review period and the proceeds of disposition, in the caseof an arm's length disposition, or fair market value of theproperty, in the case of an export or non-arm's lengthdisposition, equal or exceed the capital cost of the property, thetax payable under Part XII.7 will be equal to the original CCUS TaxCredit in respect of the property. In any other case, the tax willbe a prorated portion of the original CCUS Tax Credit. In eachcase, the tax payable is reduced by any Development CreditsRecovery Amount in respect of the property. If, during the total project review period of a CCUS project, ataxpayer disposes of or exports property for which thetaxpayer's qualified CCUS expenditure was included in computingthe taxpayer's CCUS refurbishment tax credit, an analogouscalculation of tax payable under Part XII.7 is made except that theoriginal CCUS Tax Credit is determined using the relevant specifiedpercentage. Where a qualifying taxpayer (vendor) disposes of all orsubstantially all of its property that is part of a qualified CCUSproject to another taxable Canadian corporation (purchaser), thevendor and purchaser may jointly elect in prescribed form to havesubsection 211.92(11) apply. If such election is made, the taxesdescribed above applicable to a disposition do not apply. Instead,the purchaser effectively steps into the shoes of the vendor: the purchaser is deemed to have made the qualifyingexpenditures of the vendor at the times incurred by thevendor; the provisions of the Tax Act that applied to the vendor inrespect of the property that are relevant to the application of theTax Act in respect of the property after that time are deemed tohave applied to the purchaser and, for greater certainty, thepurchaser is deemed to have claimed the CCUS Tax Creditsthat could have been claimed by the vendor, beforethat time, in respect of the CCUS project; any project plans that were prepared or filed by the vendor inrespect of the CCUS project before that time are deemed to havebeen filed by the purchaser; and the purchaser is or will be liable for amounts in respect ofthe property for which the vendor would be liable under Part XII.7in respect of actions, transactions or events that occur after thattime as if the vendor had undertaken them or otherwise participatedin them. The election can be made whether or not vendor and purchaserdeal at arm's length. However, it does not appear that theelection would apply if the vendor or purchaser were a partnershipeven if all of the members of which were taxable Canadiancorporations. Payment and Collection of Recovery Tax Section 225.1 generally establishes the time at which the CRAmay begin collection action for amounts assessed under the TaxAct. Section 225.1 will be amended to provide that the CRA can startcollection proceedings to recover 1/5 of the Recovery Tax for ataxation year one year after the notice of assessment is sent andan additional 1/5 of the Recovery Tax in each of the four yearsthereafter. Effectively, the Recovery Tax can be paid over 5 yearsfollowing the date that the notice of assessment is sent. However, for the purpose of computing interest on the RecoveryTax, the balance-due day in respect of a recovery taxation year isdeemed to be the balance due day of the taxation year for which therelated CCUS Tax Credit was claimed, creating a liability forinterest computed from the taxation year for which the CCUS TaxCredit was claimed. Disclosure and Knowledge Sharing Reporting Requirements Eligible Use Reports The annual Eligible Use Report is described above. It must bemade in prescribed form and included with the taxpayer's taxreturn. As noted, until all required returns for calendar years ina project period are filed, the actual eligible use percentage forthe project period in respect of the CCUS project is deemed to benil for the purpose of computing the Recovery Tax. Knowledge Sharing Reports Knowledge sharing reports are required in respect of large CCUSprojects. A "knowledge sharing CCUS project" is a qualified CCUSproject that either is expected to incur qualified CCUSexpenditures of $250 million or more based on the most recentproject evaluation issued by NR Can or has actually incurred $250million or more of qualified CCUS expenditures before the first dayof commercial operations. A taxpayer is a "knowledge sharing taxpayer" if thetaxpayer claimed a CCUS tax credit for a taxation year endingbefore the first day of commercial operations of a knowledgesharing CCUS project. All knowledge sharing taxpayers must submit to NR Can"knowledge sharing reports" which consist of: five annual operations knowledge sharing reports containinginformation set out by NR Can in the form annexed to NRCan's CCUS-ITC Technical Guidance Document. If commercial operations begin before October 1 of a calendar year,the first report is due June 30 of the following year and thesecond through fifth reports are due on June 30 of the yearfollowing the year to which they relate. If commercial operationsbegin after September 30 of a calendar year, the first report isdue June 30 of the second following calendar year and the secondthrough fifth reports are due on June 30 of the year following theyear to which they relate; and a construction and completion knowledge sharing reportcontaining the information described in NRCan's CCUS-ITC Technical Guidance Document which is to be filed once not later than the last day of the sixthmonth beginning after the first day of commercial operations. NR Can is required to publish knowledge sharing reports on itswebsite. It is possible that more than one knowledge sharing taxpayer isrequired to submit a knowledge sharing report in respect of aparticular knowledge sharing CCUS project. In that case, a sharedfiling rule provides that the submission of a full and accuratedisclosure by one knowledge sharing taxpayer is deemed to have beenmade by each other such knowledge sharing taxpayer. Climate Risk Disclosure Reports A knowledge sharing taxpayer must make a "climate riskdisclosure report" available to the public annually unless itis an "exempt corporation". The definition of"exempt corporation" is intended to exclude corporationsthat are not involved in any large CCUS projects from therequirement to make a climate risk disclosure report available. Acorporation is an exempt corporation at a particular time if itdoes not have an ownership interest, whether directly orindirectly, in any qualified CCUS project that has incurredexpenditures, or is expected to incur expenditures (based on themost recent project evaluation issued by NR Can), of $20 million ormore. An annual climate risk disclosure report must cover the relevantreporting taxation year. The reporting taxation years are (i) thefirst taxation year of a taxpayer in which a CCUS Tax Credit wasdeducted in respect of a CCUS project of the taxpayer; and (ii)each subsequent taxation year until the end of the 20 year periodbeginning on the first day of commercial operations of the CCUSproject. The report is due 9 months after the day on which thereporting taxation year ends. A climate risk disclosure report must include informationregarding the climate-related risks and opportunities for theknowledge sharing taxpayer based on four themes: the taxpayer's governance in respect of climate-relatedrisks and opportunities; actual and potential impacts of climate-related risks andopportunities on the taxpayer's business, strategy andfinancial planning, if such information is material; the processes used by the corporation to identify, assess andmanage climate related risks; and the metrics and targets used by the corporation to assess andmanage relevant climate-related risks and opportunities. In addition, it must explain how the corporation'sgovernance, strategies, policies and practices contribute toachieving Canada's commitments under the Paris Agreement madeon December 12, 2015, and Canada's goal of net-zero emissionsby 2050. A climate risk disclosure report must be made available to thepublic in prescribed manner. A report is deemed to have been madepublic in a prescribed manner if it includes the date it waspublished and is made publicly available on the knowledge sharingtaxpayer's website for a period of at least three years afterthe reporting-due day for the report. There is no shared filing rule applicable to climate riskdisclosure reports. Consequences of Failing to Meet the Disclosure and KnowledgeSharing Requirements A knowledge sharing taxpayer that fails to meet the applicabledisclosure and knowledge sharing requirements will be subject tothe following substantial financial consequences: In the case of failing to provide to NR Can a knowledge sharingreport in respect of a reporting period, a penalty in the amount of$2 million payable the day after the reporting-due day. In the case of failing to make available to the public aclimate risk disclosure report required in respect of a reportingtaxation year, a penalty in the amount equal to the lesser of (a)4% of the total amount of CCUS Tax Credit deducted by the taxpayerin respect of each taxation year that ended before thereporting-due day for the reporting taxation year for which thereport was not made publicly available as required, and (b) $1million. Extended Record Keeping Requirement Each person required to keep books and records on behalf of ataxpayer under section 230 is required to retain all books andrecords referred to in that section as are necessary to verifyinformation regarding the taxpayer's CCUS Tax Credit or anyamount of recovery tax payable by the taxpayer untilthe later of (i) 6 years from the end of the lasttaxation year to which the books and records relate, and (b) 26years from the end of the taxpayer's last taxation year forwhich an amount on account of the taxpayer's cumulative CCUSdevelopment tax credit was deemed to have been paid. To view the original article click  here The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.