Mr. Speaker, as part of its effort to fulfill Canada’s G20 commitment to phase out or rationalize inefficient fossil fuel subsidies, on July 24, 2023, the Government of Canada released the Inefficient Fossil Fuel Subsidies (IFFS) Government of Canada Self-Review Assessment Framework and the Inefficient Fossil Fuel Subsidies Government of Canada Guidelines. The Framework provides a definition of a fossil fuel subsidy and the methodology for assessing efficiency, while the Guidelines prevent the creation of any new inefficient subsidies. The Framework and Guidelines were jointly developed by Environment and Climate Change Canada and the Department of Finance Canada and apply to all federal departments and agencies.
Consistent with the Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework, the Government of Canada has phased out or rationalized the following nine tax measures supporting the fossil fuel sector: phase-out of the accelerated capital cost allowance for oil sands (announced in Budget 2007);reduction in the deduction rates for intangible capital expenses in oil sands projects to align with rates in conventional oil and gas sector (announced in Budget 2011); phase-out of the Atlantic Investment Tax Credit for investments in the oil and gas and mining sectors (announced in Budget 2012); reduction in the deduction rate for pre-production intangible mine development expenses to align with rate for the oil and gas sector (announced in Budget 2013); phase-out of the accelerated capital cost allowance for mining (announced in Budget 2013); allowing the accelerated capital cost allowance for liquefied natural gas facilities to expire as scheduled in 2025 (announced in Budget 2016); rationalize the tax treatment of expenses for successful oil and gas exploratory drilling (announced in Budget 2017); phase out tax preference that allows small oil and gas companies to reclassify certain development expenses as more favorably treated exploration expenses (announced in Budget 2017); and, phase-out of flow-through shares for oil, gas, and coal activities (announced in Budget 2022).
Canada is currently developing a self-review report which will include information on all identified federal fossil fuel subsidies and its self-assessment against the IFFS Framework. These reports will be made public before the end of 2024.