Canada now has a nationwide standard for reducing carbon pollution, which means that starting in 2019, a federal “backstop” carbon pollution pricing system will apply to four provinces – Saskatchewan, Manitoba, Ontario and New Brunswick – that have not implemented their own systems. For taxpayers in these provinces, a new refundable tax rebate will be claimed on the 2018 tax return. But, like most tax provisions, it has its wrinkles.
The majority of the charges collected from a fuel tax that begins on April 1, 2019, will be returned through this rebate, called the Climate Action Incentive payments. The amounts being returned to individuals and families are calculated as follows:
|Spouse/Eliglble Dependant||Qualified Dependant|
Payments in Subsequent Years. Climate Action Incentive payments will increase annually as fuel charges rise, until at least 2022. The exact payment amounts are to be announced annually, but for the time being are projected to be as follows:
|Family of Four||$903||$1,189||$1,459|
|Family of four||$499||$654||$801|
|Family of four||$451||$588||$718|
|Family of four||$377||$495||$607|
Supplement for Residents of Rural and Small Communities. In recognition of increased energy needs and reduced access to alternative transportation options, residents of rural and small communities will have their payments increased by 10 percent. To find out which areas will qualify, go to this link.
There, you should be able to find the places outside of metropolitan areas that may qualify, according to CE Summit delegate Dianne Lepage of Liberty Tax Service. She tells us that some towns don’t show up per se, but their rural municipality does. For example, Rapid City, Manitoba, is not there but the rural municipality of Oakview is. It will, in other words, take some digging to find out exactly who qualifies to get the extra payment.
Following are other criteria for the program shared by Finance Canada:
Relief for Farmers. Upfront relief from the fuel charge will be provided with exemption certificates when certain conditions are met. Specifically, a registered distributor can deliver, without the fuel charge applying, gasoline or light fuel oil (e.g., diesel), if the fuel is for use exclusively in the operation of eligible farming machinery and all, or substantially all, of the fuel is for use in the course of eligible farming activities. Farmers do not need to be registered for the purposes of this relief.
Eligible farming machinery means property that is primarily used for the purposes of farming and that is a farm truck or tractor, a vehicle not licensed to be operated on a public road, or an industrial machine or stationary or portable engine. Diversion rules to ensure that the fuel charge applies if gasoline or light fuel oil is not used as intended.
Relief for Fishers. Similar rules apply to fishers when all, or substantially all, of the fuel is for use in the course of eligible fishing activities and when certain conditions are met, one of them being that the province be prescribed for the purposed of the relief. There are currently no listed provinces that are prescribed.
Exemptions to Carbon Taxes. A full exemption from carbon pollution pricing will be granted to: diesel-fired electricity generation in remote communities, for aviation fuel in the territories, and for farmers and fishers. Partial relief from the fuel charge would also be provided for eligible commercial greenhouse operators.
Bottom line: Remind all taxpayers in these provinces to file a tax return – whether they have income or not. It will lead to a bigger tax refund!
Additional educational resources: It’s not too late to register for an advanced personal income tax update, with live workshops taking place in Edmonton on Thursday, and Vancouver on Friday. Or, study online and get your DFA – Tax Services Specialist credentials!
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