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New Change to GST/HST Reporting on Sale of Carbon Emission Allowances

Online Tax Strategies−July 2018 : New change to GST/HST reporting on sale of carbon emission allowances

Businesses and other persons who buy or sell emission credits under a cap and trade or other carbon pricing system should be aware of recent changes made by the Department of Finance to the reporting of GST/HST on sales of carbon emission allowances.

As of June 27, 2018, a person who purchases taxable carbon emission allowances from another person is required to self-assess the applicable GST/HST on that purchase. In the past, the tax on such a transaction would have been required to be collected and remitted in the more usual way by the vendor. Transitional rules have also been announced to accompany this change.

Carbon emission allowances are credits and similar instruments issued by a government, international organization or other regulating body to quantify greenhouse gas emissions to satisfy a program implemented to regulate such emissions.

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