UPDATE – Federal: Tax credit for farmers that use propane a partial win

For some time, the CPA has been advocating for the fair treatment of propane under the federal carbon pollution pricing system. Under the Greenhouse Gas Pollution Pricing Act (GGPPA), the government applies a price on pollution in “Backstop jurisdictions” that do not have their own system (Alberta, Saskatchewan, Manitoba and Ontario). Until now, using propane was at a disadvantage relative to using gas and diesel, which are exempted under the GGPPA for agricultural application.

In the fall economic statement, the federal government has finally recognized the importance that propane plays in farming operations. As a result, the government will return fuel charge proceeds directly to farming businesses in backstop jurisdictions via a refundable tax credit, starting in the 2021-22 fuel charge year.

While this decision by the federal government is a gain for the propane industry, it is only a partial win. The rebate offered is well short of what is needed for the use of propane for grain drying.

According to Grain Farmers of Ontario, “The tax credit being proposed would return less than 20 per cent of the costs incurred to corn farmers.” Read their entire news release, Carbon Tax Refund For Grain Drying Is Needed Urgently For Ontario Grain Farmers.

The CPA will continue to seek the equal treatment for the use of propane in farming applications.