CCR: A Deeper Tax Dive

Evelyn Jacks

There are lots of tax details around the carbon taxes paid by Canadians and their carbon tax rebates, which now will have a third name since 2018.  The Canada Carbon Rebate (CCR) will help offset the increased costs of fuel at the pumps but, heating costs have also increased due to the new carbon tax, on which the GST/HST is also charged – a tax on tax.  Residency is also required to access the CCR, which means new forms for newcomers.  Check it out:  

Nothing Extra for Heating Bills, Except in the Maritimes. Canadians are concerned about the cost of living this year and understand they are paying more because of the carbon taxes; but not necessarily how much. 

A December 2023 Angus Reid report summarized this well:  at the pump  “the tax adds between 14 and 17 cents per litre, depending on whether a person is using gasoline (lower) or diesel (higher).”  The also found:

• Just three-in-10 Canadians accurately identify this number.
• 0ne-in-seven underestimate it,
• More than one-in-three (35%) overestimate the cost.
• Those who live in B.C., where the tax is matched to the federal rate at 14.3 cents per litre, are most likely to vastly overestimate.
• Quebec is excluded because its carbon tax is currently lower than the federal rate:

Regarding the additional cost of carbon taxes on heating, it was found:

• For Heating Oil.   “The increased cost of the carbon tax on home heating oil varies but one estimate by a Dalhousie University professor provides some context. His estimate placed the carbon tax portion of an energy bill in Halifax at about nine per cent.”
• For Natural Gas.  “In Manitoba, energy operators have estimated that the carbon tax on natural gas will cost about $58 per year or an eight per cent annual increase for larger users. SaskEnergy estimates an additional $67 per year or about seven per cent annual increase for natural gas customers.”

In late 2023, the federal government gave a carbon tax holiday on heating oil for three years to residents of the Atlantic Provinces.  This will result in a lower quarterly CCR in those provinces, however, and will not be extended, at least at the time of writing, to other areas in Canada.

Residency is Required.  You have to be a resident of Canada to receive the CCR.  For newcomers to Canada, a series of forms may be required. 

• For newcomers without children, file Form RC151, GST/HST Credit and Canada Carbon Rebate Application for Individuals who Become Residents of Canada
• Form RC66SCH, Status in Canada and Income Information for the Canada Child Benefits Application is required to provide citizenship and residency information, and a Statement of Income
• Form RC66, Canada Child Benefits Application includes federal, provincial, and territorial programs to apply for all child and family benefits

Some Entitled Taxfilers Will Receive Nothing.  Taxpayers who owe money to the CRA will lose their CCR until income tax balances or amounts owing to other federal or provincial government programs are paid up. 

Nothing Yet for Small Business, Either. Business owners are still waiting for their share of promised carbon tax relief, unfortunately.  According to a news release issued by the CFIB on February 8, 2024, “The federal government has been sitting on $2.5 billion in carbon tax revenue collected since 2019 despite repeated promises to return it to small businesses in Ontario, Manitoba, Saskatchewan and Alberta.” 

CRA Doesn’t Pay Interest.   Note that the CRA pay interest on any CCR payments it owes the taxpayer so the longer a tax return is outstanding the more the carbon tax rebate is being eroded by inflation.

How to Make a Difference.  This tax season, tax and financial pros can be proactive in helping their clients understand their rights under the carbon tax rebating system that has been in place since 2018 and in particular, help the millions of newcomers to Canada get access to it.   But it requires some careful study as the tax details are complex.