Amendments to the Petroleum Products and Carbon Tax Regulations, effective April 1, 2023, introduce revisions to definitions, rebate and grant systems, and administrative procedures pertaining to carbon tax.

The revisions include updates to several definitions within the Act. Notably, the term “Tax Administration Division” has been replaced with “Taxation Section” to reflect a reorganization of tax management functions. Additionally, new terms such as “fiscal year,” defined as the period from April 1 to March 31, and “large emitter,” referring to entities subject to specific regulatory measures, have been introduced.

The amendments revise the rebate process for carbon tax on public utilities. Vendors supplying electricity production fuels, such as diesel or propane, to public utilities must provide rebates equivalent to the carbon tax at the point of sale. Should a rebate not be provided, public utilities are entitled to seek reimbursement from the Minister within one year of the purchase.

New provisions detail the grant system available to large emitters to offset carbon tax costs. These provisions include:

• • • Eligibility: Large emitters, including corporations operating major mines like Ekati, Diavik, Gahcho Kué, and Snap Lake, are eligible for grants.
    • Application and Limits: Large emitters can apply for grants to cover carbon taxes paid, subject to an annual maximum threshold based on the diesel fuel consumption of their operations.
    • Extraordinary Events: Grant thresholds may be adjusted in response to significant production disruptions caused by unforeseen events, such as fires or equipment failures.
    • Reconciliation and Refunds: Large emitters must submit a reconciliation report by June 30 of the subsequent year. If the granted amount exceeds the carbon tax paid, the emitter must return the excess. Conversely, if the grant is insufficient, additional funds may be granted up to the annual limit.

Grants are also available for large emitters to fund projects aimed at reducing greenhouse gas emissions. These grants may utilize unused contributions from previous years and must be applied for within two years following the completion of the project.

These regulatory changes are intended to improve the administration of carbon taxes, aiding in effective management of rebates and grants. By improving clarity and efficiency and in reducing carbon emissions, thereby contributing to environmental and economic stability in the region.

Source: Northwest Territories, March 29, 2023