Province to halt carbon-tax rebate clawbacks

The Alberta government is closing an embarrassing loophole that saw the Canadian Revenue Agency claw back carbon tax rebates due to the death of someone in a household.

Premier Rachel Notley vowed in the legislature to put a stop to the clawbacks after incensed families complained about the notices issued while they mourned a family member.

Any households that received clawback notices will not have to pay the money back to the CRA and amounts already paid will be returned.

“For a relatively small number of families, the program didn’t work as it should have,” Finance Minister Joe Ceci told a news conference at the Alberta legislature on Wednesday.

“Grieving families should not face the indignity of a collection letter demanding the repayment of a benefit that is supposed to make their lives better.”

Ceci said he spoke to some of the families who were affected and said he understands their frustration.

The legislation will tweak how the carbon tax rebates are distributed and puts an end to the pre-payments that caused all the trouble.

Households that qualify for the minimum rebate of $100 previously received the full amount in the first quarter, as opposed to households receiving the maximum rebate, who get a payment each quarter.

Instead of a first-quarter payment of $100, those households will get a $25 payment each quarter. If the legislation passes, the change will come into effect on July 1.

Any further rebates will also now be based on household income in 2016, rather than 2015. Previously, a household where someone lost their job in 2016 might not be receiving a rebate due to income in the prior year. “Albertans will see a difference,” said Ceci.

The finance department estimates about 4,000 households were issued clawback notices out of 1.2 million payments issued. Although the CRA can’t provide an exact number, the Alberta government estimates that to be about $300,000 to $400,000 worth of clawbacks, out of $150 million in rebates.

Individual clawback amounts were anywhere from $25 to $150.

Progressive Conservative caucus leader Ric McIver said the change is “proof positive that it’s the province’s policy that has caused these situations,” rather than the CRA.

The legislation makes similar changes to the Alberta Child Benefit and the Alberta Family Employment Tax Credit.

The legislation, dubbed the Tax Statutes Amendment Act, 2017, also implements tax credits for party leadership contest and nomination races. Recent legislation put a cap of $4,000 on contributions to a leadership race and the maximum donation eligible for a tax credit is $2,300.