Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Ministerial correspondence requesting data and information on measures through which the Government is paying back carbon-pricing revenues to families and businesses.
Position: See response.
Reasons: Response includes a referral to Environment and Climate Change Canada, as well as Finance Canada.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Diane Lebouthillier, Minister of National Revenue, received your correspondence about the climate action incentive (CAI). She has asked me to reply on her behalf. Thank you for your understanding regarding the delay of this response.
The Canada Revenue Agency (CRA) administers the CAI for individuals and families who are residents of Ontario, Manitoba, Saskatchewan, and Alberta. The CAI is a refundable credit that consists of a basic amount and a supplement for residents of small and rural communities. Eligible individuals for a given tax year can claim the CAI when they file their income tax and benefit return. Taxpayers calculate their CAI amount using Schedule 14, Climate Action Incentive, for the relevant province.
For information about the CAI and to find out if you are eligible, please see “Line 45110 – Climate action incentive” at canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-45110-climate-action-incentive.
In addition to the CAI for individuals and families, current tax measures allow an enhanced capital cost allowance (CCA) for certain property acquired after November 20, 2018, that becomes available for use before 2028. For example, the measures allow businesses to immediately write off the full cost of specified clean energy equipment in classes 43.1 and 43.2, with a phase-out for property that becomes available for use after 2023. For more information, please see the paragraph titled “Accelerated investment incentive property” in “T2 Corporation – Income Tax Guide – Chapter 3: Page 3 of the T2 return” at canada.ca/en/revenue-agency/services/forms-publications/publications/t4012/t2-corporation-income-tax-guide-chapter-3-page-3-t2-return.
Through the creation of two new CCA classes, class 54 and class 55, current tax measures also support business investments in zero-emission vehicles that are acquired after March 18, 2019. These new classes have an enhanced first-year CCA deduction of 100% for zero-emission vehicles that become available for use before 2024, with a phase-out for vehicles that become available for use after 2023. For more information, please see the “What’s new for 2019?” section at canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-2.
I am pleased to inform you that the Government of Canada is proposing a new CCA class, class 56, to provide a temporary enhanced first-year CCA rate of 100% in respect of eligible zero-emission automotive equipment and vehicles that currently do not benefit from the accelerated rate provided by classes 54 and 55. This proposed CCA class would apply to eligible equipment and vehicles that are acquired on or after March 2, 2020, and that become available for use before 2028, subject to a phase-out for equipment and vehicles that become available for use after 2023. For more information, please see “Business Investment in Zero-Emission Automotive Vehicles and Equipment” at canada.ca/en/department-finance/news/2020/03/business-investment-in-zero-emission-automotive-vehicles-and-equipment.
The Climate Action Incentive Fund (CAIF) gives funding to small and medium-sized enterprises, among others, to support projects that reduce carbon pollution, including the adoption of clean technology. I suggest that you contact the Honourable Jonathan Wilkinson, Minister of Environment and Climate Change, for more information about the funding streams available to businesses as well as the deadlines to submit applications for funding. You can email his office at Jonathan.Wilkinson@parl.gc.ca.
You can also find more information about the CAIF and its rebates at canada.ca/en/environment-climate-change/services/climate-change/carbon-pollution-pricing-proceeds-programming/climate-action-incentive-fund, and information about the related Low Carbon Economy Fund at canada.ca/en/environment-climate-change/services/climate-change/low-carbon-economy-fund.
The CRA does not keep statistics about the dollar amounts collected from the proceeds of the federal carbon pollution pricing system or those paid out to businesses from these proceeds. I suggest you contact the Honourable Bill Morneau, Minister of Finance, for this information. You can email his office at Bill.Morneau@parl.gc.ca.
You can also contact the relevant authorities in your province to ask about funding or financing opportunities relating to investments in clean energy or other carbon-rebate-specific programs.
I trust the information I have provided is helpful.
Sincerely,
Geoff Trueman
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
Randa El-Kadi
2020-084191
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