The federal fuel charge will take effect in New Brunswick as of July 1, 2023. This change is the result of New Brunswick's request in February 2023 that the federal fuel charge replace the province’s own fuel charge. New Brunswick will continue to apply its own provincially administered pollution pricing system for industrial emitters. As a result, certain businesses will have to determine if they have new federal compliance obligations that will soon apply.
Background
The federal carbon pollution pricing system includes a fuel charge applied to fossil fuels, as well as an output-based pricing system for industrial facilities that emit greenhouse gases above a certain threshold. These rules, which were introduced in 2018, apply in provinces and territories that do not have carbon pricing systems that meet the federal benchmark.
Previously, New Brunswick announced in February 2023 that it would replace its provincial fuel charge with the federal fuel charge, effective July 1, 2023. The province confirmed this change in its 2023 provincial budget. As a result, the federal fuel charge is scheduled to apply, as of July 1, 2023, in New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island, and will continue to apply in Alberta, Saskatchewan, Manitoba, Ontario, Yukon and Nunavut.
The federal government previously announced an update to its carbon pricing benchmark in August 2021 that, among other changes, set out minimum national carbon pollution prices over eight-years beginning in 2023. The benchmarks replace the 2018-2022 benchmarks and associated guidance. At the same time, the federal government confirmed that where the federal backstop applies in 2023 it will remain in place until at least the end of 2026. Subject to any major changes to the provincial and territorial systems, an interim assessment will be conducted by the federal government in 2026 to confirm that the provincial and territorial systems continue to meet the benchmark criteria.
Compliance obligations
Fuel producers, emitters, importers and distributors, as well as air, marine, rail and road carriers, and certain users of fuel or combustible waste in New Brunswick, will have to determine if they are required or permitted to register for the federal fuel charge and prepare to meet the registration, reporting and compliance obligations under the federal rules.
Climate Action Incentive payments
In New Brunswick, 90% of direct proceeds from the federal fuel charge will be returned to individual residents through quarterly federal Climate Action Incentive (CAI) payments. The quarterly CAI payments are effective from July 2023, as long as individuals have filed their income tax returns. Similar CAI payments are made to residents of other provinces where the federal fuel charge applies.
For more information, contact your KPMG adviser.
Information is current to May 8, 2023. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
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