Fiscal update includes details on promised carbon tax rebate for farms


New details on how the federal government plans to rebate carbon taxes paid by farmers in Ontario, Manitoba, Saskatchewan, and Alberta were included in the Dec. 14 fiscal update presented by Finance Minister Chrystia Freeland.

The Liberal government had previously promised, in the lead-up to the federal budget in spring 2021, that it would refund an estimated $100 million to farmers in provinces without federally-approved carbon pricing systems — where the federal carbon pricing “backstop” is in place — in 2021.

“We are committed to new rebates for on-farm fuel use such as grain drying, in order to both support our food producers and also encourage new investments in sustainable technologies, that go beyond existing exemptions for farm fuels and rebates for greenhouses,” said Agriculture Minister Marie-Claude Bibeau and former Environment Minister Jonathan Wilkinson back in February.

On pages 81-83 of the fiscal update released on Tuesday, the federal government outlines its plan to offer a refundable tax credit based on a farm’s overall expenses, as calculated for tax purposes.

For 2021, the refundable tax credit rate has been set at $1.47 for every $1000 in eligible farm expenses incurred. The rate will increase to $1.73 for 2022, according to the fiscal update, reflecting the rising federal carbon price.

To be eligible, a farm must incur total farming expenses of at least $25,000.

Eligible farming expenses are “amounts deducted in computing income from farming for tax purposes, excluding any deductions arising from mandatory and optional inventory adjustments and transactions with non-arm’s length parties.”

More to come.

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