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EDITORIAL: That carbon tax refund is a real doozy

EDITORIAL: That carbon tax refund is a real doozy

Posted: 2022-03-26 08:48:23 By: thebay

Those of us paying attention to promises made by Prime Minister Justin Trudeau were expecting a carbon tax refund back in 2018, then again in 2019, and again in 2020. 

Well, it’s a good thing we didn’t hold our collective breaths. But, to our surprise we found out this week that the carbon tax refund is actually coming as a payment this year.

Highlight those words, “as a payment,” and read on. 

Did you know, you were entitled all along to claim it as a credit on your annual taxes? For each tax year from 2018 through 2020?

No? Neither did we. If you were one of the few who did know, more power to you. But, for most people, unless they are a tax professional or really, really keen on tax topics, they likely didn’t know.

To learn more about the climate action incentive payment schedule in 2022 and eligibility, visit: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/cai-payment.html

You see, while quarterly Carbon Tax Refund cheques are expected to be sent to eligible Canadians in 2022 who file their 2021 taxes, in previous years the “refund” was only a tax credit that could be applied for and claimed as an annual deduction on personal income tax returns.

It was not automatically applied, as it should have been when the Liberals were touting it as a “refund.” 

Instead, a separate form (Schedule 14 - Climate action incentive) had to be filled out to find the amount one was eligible to claim.

Those wondering if you can retroactively apply for the “refund” for the 2018 through 2020 tax years should know that the answer is likely “sort of.” 

By that we mean that you can file for a reassessment of your taxes in each year and be sure to fill out Schedule 14, then apply the eligible amount. Of course, that’s only if it wasn’t already applied by your accountant or bookkeeper.

This is because the “refund” wasn’t being paid out to Canadian taxpayers. It was only being used as a credit or deduction to reduce amount owed or increase the refund warranted. In such a case, you can’t only apply for that without doing a full tax re-filing.

And how many of us are really going to go through that entire process for three straight tax years? Well, hopefully some of us. With two child dependents and living in what the feds consider a small community (we get a bonus 10% credit), I could claim an extra $495 per year in climate action credits.

Of course, that opens another can of worms in the form of a potential audit. We’re not saying if you go back and do three years of taxes again to gain $300-plus annually you’ll certainly get audited, but there is always that chance.

So, unless you have airtight paperwork and a very nonchalant personality, it may not be worth the stress.

On the other hand, according to the promises Trudeau made, we’re entitled to those credits, so we should go back and get them applied.

Which brings us back to our previous point that since it was being touted publicly as a “refund,” this tax credit should already have been applied to everyone’s taxes each and every year.

Now, please excuse us while we call our tax professionals to find out if they applied for the climate action incentive credit for the 2018 through 2020 tax years . . . and we urge anyone who isn’t sure to do the same.