What is Alberta’s new carbon tax?

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What is Alberta’s new carbon tax?

Love it or hate it, the carbon tax is here. Alberta’s new carbon levy and rebate program aims to reduce greenhouse gas emissions by providing Albertans with an incentive to lead a lower emission lifestyle.

How does it work?

Starting January 1, a carbon levy will be added on most fuels such as natural gas, gasoline, diesel, and propane.  The amount of the carbon levy varies depending on fuel type and consumption.

Who gets the rebate?

Carbon levy rebates will be given to lower and middle income Albertans. You may be eligible for a rebate of $200 for an adult, $100 for a spouse and $30 for each child under 18 (up to four children). Full rebates will be provided to single Albertans who earn $47,500 or less, and couples and families who earn $95,000 or less. The province will automatically calculate and issue your rebate based on your prior year tax return.

Our thoughts

Though well intentioned, Alberta’s carbon tax has unmeasured effects for individuals and businesses alike. The province has been forthcoming in their communication on the direct expense to Albertans, meaning the amount you will pay in carbon tax that is directly linked to your consumption of fossil fuels. To this point, however, there is little communication regarding what the carbon tax will cost Albertans indirectly as a result of businesses passing their carbon tax onto consumers. These unmeasured costs will be known in the coming weeks and months as we begin to pay the tax.

Another consideration is that the carbon tax is collected from all Albertans based on consumption, but redistributed based on annual family income. Therefore, there is no alignment between leading a lower emission lifestyle, and receiving a carbon tax rebate.

The current program also leaves a hole where individuals and families who hold significant wealth, but draw little income, are eligible for the rebate.

1917 CPA is committed to helping you reduce your family tax bill. There are planning opportunities to help families become eligible for the carbon tax rebate by splitting and reducing family income. Contact us to find out more about how we can help you. P: 403-285-8193 |F: 888-315-4159 |E: Info@1917CPA.com

Resources:

Calculate the estimated amount of Alberta’s carbon levy you will pay here: http://www.cbc.ca/news/canada/calgary/multimedia/alberta-carbon-tax-calculator-1.3900339

For more information, visit the Alberta Governments website: https://www.alberta.ca/climate-carbon-pricing.aspx

 

1917 Chartered Professional Accountants is a Calgary based accounting firm focused on helping individuals and businesses with their financial reporting, taxation planning, and compliance.