Return of Fuel Charge Proceeds

If you are a self-employed farmer or an individual who is a member of a partnership operating a farming business with one or more permanent establishments in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan, you may be eligible to have a portion of fuel charge proceeds returned to you. This refundable tax credit is a way to return fuel charge proceeds under the federal carbon pollution pricing system directly to eligible farming businesses.

Recognizing that many farmers use natural gas and propane in their operations, the federal government provides a refundable tax credit to return fuel charge proceeds to farming businesses that operate in provinces where the federal fuel charge applies. The total credit is determined as the total of all individual credit amounts calculated for each designated province. The payment rate is specified by the Minister of Finance. This rate is 2.29% for 2024, and 2.50% for 2025. The credit is equal to the payment rate for the designated province multiplied by the eligible farming expenses for the designated province for the year.

Farming expenses are deemed to be nil if the gross eligible farming expense (i.e. the total amount of expenses deducted in computing taxable income from farming activities for the year excluding any deductions arising from non-arm’s length transactions and from inventory adjustments under section 28 of the Income Tax Act) are less than $25,000. In other words, no refundable tax credit can be claimed if farming expenses for the year are less than $25,000.

To claim this credit an individual must file Form T2043, Return of Fuel Charge Proceeds to Farmers Tax Credit with their T1 return for the year. If there are multiple farming businesses, only one Form T2043 is filled, and the applicable additional calculation chart(s) for each of the farming businesses.is attached. The amount of the refundable credit claimed for the year is considered government assistance received by the individual immediately before the end of the year. Therefore, the amount of the credit must be reported as income for the year.

Another important rebate to note as you prepare tax returns this year is a Refund of Federal Excise Tax on Gasoline for a Registered Canadian Amateur Athletic Association, a Registered Charity or an Individual with a Permanent Mobility Impairment. To claim this rebate the Excise Tax Act – Application for Refund of Federal Excise Tax on Gasoline Form must be completed and sent to CRA.

The program allows for the above said categories to claim a refund for part of the excise tax paid on gasoline at the rate of $0.015 per liter or $0.0015 per kilometer for allowances paid to employees for the operating expenses related to vehicles used for business purposes. To qualify for a refund, the gasoline bought must be for use and not for resale. Only gasoline purchases related to the type of claimant listed above (and in Part C of the Form) can qualify for an excise tax refund. Gasoline purchased for personal use does not qualify for a refund unless the claimant is an individual with a permanent mobility impairment. Gasoline purchased in a foreign country does not qualify for an excise tax refund

An individual with a permanent mobility impairment must have been certified by a qualified medical practitioner to be suffering from a permanent impairment of locomotion to such an extent that the use of public transportation by that person would be hazardous.

            .