Officially called the Return of Fuel Charge Proceeds to Farmers Tax Credit, a new carbon tax rebate for Alberta farmers became available as a refundable tax credit beginning in 2021.
Who is eligible?
- Corporations, individuals, partnerships, and trusts that:
- Actively engage in either management or day to day activities of earning income from farming
- Have total farming expenses of $25,000 or more
- For partnerships, the tax credit is calculated at the partnership level and then each partner calculates their credit entitlement based on their proportionate interest in the partnership.
How much is the tax credit?
- 2021: $1.47 per $1,000 of eligible farming expenses
- 2022: $1.73 per $1,000 of eligible farming expenses
What expenses are eligible?
- Farming expenses must be attributable to farming in either Alberta, Manitoba, Ontario, or Saskatchewan and must meet or exceed the threshold of $25,000
- All expenses deducted in calculating income from farming for tax purposes are eligible, with the exclusion of:
- deductions arising from optional or mandatory inventory adjustments
- transactions with non-arm’s length parties
- When a tax year-end does not align with the calendar year-end, eligible farming expenses will be allocated to each calendar year based on the number of days in each calendar year over the total days in the taxation year.
How do I apply?
- By filling out Form T2043 (this is part of your personal income tax return, or T1)
- Tax credit received will be reported as income in the year of claim