Wednesday, March 13, 2019

CRA 2018 - Climate Action Incentive and Studio Tax

For provinces including Ontario, Saskatchewan, Manitoba and New Brunswick who chose not to implement their own carbon tax plans, the Federal government intends to levy its own taxes on fuel purchased in those locales. To offset the impact of this, the 2018 CRA tax form has included a Climate Action Incentive, which gives Canadians in these provinces a tax deduction which directly reduces the amount of income tax owed.  There seem to be no income claw-back implications so each household is eligible to receive some amount, depending on the family size.  An extra amount is provided for small or rural communities.  Note that only one taxpayer can claim this incentive on behalf of the household and it probably makes sense for the one with the higher income to do so.

The incentive is supposed to be revenue neutral for the Federal government and compensates for the impending higher fuel charges. This is meant as an appeasement to those against a carbon tax, and the incentive has been offered in advance of that tax being applied.  However so far, there has not been much publicity highlighting this incentive, and even less information about how you actually go about claiming it on your tax form.  As an appeasement tactic for the Federal government, not touting this far and wide seems counterproductive?

After some searching on the internet, my husband and I found that you need to fill out Schedule 14 and the resultant deduction will appear on Line 449 of the Credits section (page 4) of your income tax form. I chose to apply the deduction to my taxes. For years now, we have used the free income tax program StudioTax in order to enter our tax information and to NETFILE.  Once we figured out which schedule to fill out, it was a simple matter of finding that form on StudioTax and filling out the few fields relevant to us.

The program automatically applied the applicable deduction to line 449 and the amount of my taxes owed was reduced accordingly.  I assume that anyone filling out a paper form would need to fill out Schedule 14 as well as enter the result in line 449.

More information can be found here:

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