Return of Fuel Charge Proceeds to Farmers

Evelyn Jacks & Walter Harder

In the 2021 Federal Budget, the government promised to return fuel charges to farmers in Ontario, Manitoba, Saskatchewan, and Alberta.  The form to apply for this credit (T2043) has just been released, and the government has indicated that the refundable credit should be claimed on the new line 47556. 

However, claims for this credit will not be processed by CRA until the proposed legislation is passed by parliament and receives Royal Assent.

The credit is based on gross farming expenses (excluding inventory adjustments and non-arm’s length expenses).  To claim the credit, the farm must have at least $25,000 of eligible expenses.  The credit claim for 2021 is $1.47 per $1,000 eligible expenses.  For 2022 the credit is $1.73 per $1,000 eligible expenses.

Form T2043 has six parts and only one form is claimed by an individual even if there are multiple farming operations or by a member of a partnership.  However a separate calulation chart will be completed for each farming business.  This gets even more complicated when there are multiple businesses with permanent establishiments in multiple provinces.

It will be necessary to refer to Form T2042 Statement of Farming Activities to complete this form.  You’ll need to record:

1. Gross eligible farming expenses
2. Return of Fuel charge proceeds to the Farmers Tax Credit
3. Summary of allocation of eligble farming expenses to one designated province
4. Return of Fuel charge proceeds to the Farmers Tax Credit when there is one designated province but businesses in more than one
5. Total fuel charge proceeds
6. Chart: Gross eligible farming expenses
7. Chart: Allocation of eligible farming expenses to a designated province (ON, MB, SK, AB)
8. Chart:Return of fuel charge proceeds to the Farmers Tax Credit if operating in more than one province

Farm tax specialists will want to take a close look at this form now, in advance of the rush of tax filing season to get ahead of the filing requirements for this additional tax credit.    

Additional educational resources: Don’t miss this opportunity to take Canada’s most up-to-date and comprehensive Advanced T1 Tax Update Course for Professional Tax Accounting firms and their new and returning staff who will file 2021 T1 Returns. This is Canada’s #1 tax training program for busy practice owners who need to recruit and train staff in time for this tax season.