Tax Credit Payment Rates to Return Fuel Charge Proceeds to Farmers for 2023-24

Under the federal carbon pollution pricing system, the federal government applies a price on pollution in jurisdictions that do not have their own system.

The Government of Canada does not keep any direct proceeds from pollution pricing. All direct fuel charge proceeds are returned to the province or territory of origin. In provinces where the federal fuel charge applies, approximately 90 per cent of those proceeds are returned directly to Canadians through pollution price rebates, and the remainder is returned to small businesses, Indigenous governments, and farmers.

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.

For the 2023-24 fuel charge year, the Minister of Finance is using her authority under the Income Tax Act to specify payment rates for eligible farming expenses that are incurred in the 2023 calendar year, and the designated provinces in which these payment rates will apply.

Eligible farming businesses may make claims for these amounts on their tax returns that include the 2023 calendar year.

The lower rate for New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador reflects the fact that the federal fuel charge began applying to those provinces as of July 1, 2023, which is three months into the fuel charge year.