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What Is the Climate Action Incentive Payment?

What Is the Climate Action Incentive Payment?

Most Canadians are familiar with longstanding tax credits, such as the GST/HST credit and the Canada Child Benefit (CCB). But there’s another family credit you may be eligible for, and it’s paid in quarterly installments. It’s called the Climate Action Incentive (CAIP), and it’s been expanded to three additional provinces for 2023-24.

In this article, I’ll share everything you need to know about this important benefit, including who is eligible, how much you can receive, and why the benefit exists in the first place.

What Is the Climate Action Incentive Payment?

The Climate Action Incentive Payment is a tax-free quarterly payment made to residents of several Canadian provinces to offset the cost of the federal carbon tax.

Before 2021, the CAI was a refundable tax credit you claimed on your income tax return. However, as of July 2022, the credit became a quarterly payment. You don’t have to apply for the CAIP; if you qualify, the Canada Revenue Agency will automatically enroll you based on your annual income tax return information.

CAIP Expansion

For the 2022 tax year, CAI payments are being expanded to include three Atlantic provinces: Nova Scotia, PEI, and Newfoundland & Labrador. Further down, I’ll provide more detail on how payments will work for residents of those provinces.

Why Is My Province Not Included in the CAIP?

If your province isn’t included in the CAI program, it means that you don’t pay a fuel surcharge when filling your gas tank. Your province has established a provincial carbon tax or an alternative carbon pollution pricing system satisfactory to the federal government.

Who Is Eligible to Receive the CAIP?

In addition to residing in a qualifying province, one of the following must apply to be eligible to receive the CAIP:

  • 19 years of age or older
  • You have (or had) a spouse or common-law partner
  • You are (or were) a parent and live (or lived) with your child

To receive additional credit for an eligible child, all of the following must apply:

  • Your child is under 19
  • Your child lives with you
  • You are the primary guardian of your child
  • Your child receives the Canada Child Benefit (CCB)

What About Newcomers to Canada?

If you are new to Canada, you may qualify for the quarterly CAI payment, but you will need to apply. Here are the steps you need to follow:

  1. If you have children, complete form RC66. This is the same form you would fill out for all family benefits, including the GST/HST rebate and the CCB.If you don’t have children, complete form RC151.
  2. Once you have filled out and signed the form, mail it to your tax centre (address on the form).

Climate Action Incentive Payments by Province

As mentioned, four provinces were included in the CAIP program for the 2021 base year (payments beginning in July 2022). In July of 2023, individuals and families in three Atlantic provinces, Nova Scotia, PEI, and Newfoundland & Labrador, will begin receiving CAIP payments.

The climate action incentive payment is not an income-tested benefit like the GST/HST credit or the CCB. In other words, CAI payments aren’t reduced as your income increases. Your CAI payment is set based on the province you live in and your family situation.

The federal government has included a rural supplement of 10% of the base amount for people living in rural communities. And no interest is charged or paid by the Canada Revenue Agency (CRA) on any overpayments or underpayments.

CAI Payments by Province for 2023-2024

The CAI Payment amounts are changing for 2023-24 (2022 base year). Residents of Ontario, Manitoba, Saskatchewan, and Alberta will receive quarterly payments in April, July, October, and January (2024).

Residents of Nova Scotia, PEI, and Newfoundland & Labrador, won’t receive payments until July 2023 because that’s when the federal fuel charge begins for those provinces (July 1, 2023).

Note: CAI Payments are sent out on the 15th of the month.

Here’s a breakdown of CAI payments, annual and quarterly, by province for 2023-24:

Climate Action Incentive Payment: Ontario

Here’s how the annual climate action incentive credit breaks down for residents in Ontario in 2023-24:

Annual

  • First Adult: $488
  • Second Adult: $244
  • Each child under 19: $122
  • Family of 4: $976

Quarterly

  • First Adult: $122
  • Second Adult: $61
  • Each child under 19: $30.50
  • Family of 4: $244

Climate Action Incentive Payment: Manitoba

for 2023-24, the climate action incentive for Manitoba residents is as follows:

Annual

  • First Adult: $528
  • Second Adult: $264
  • Each child under 19: $132
  • Family of 4: $1056

Quarterly

  • First Adult: $132
  • Second Adult: $66
  • Each child under 19: $33
  • Family of 4: $264

Climate Action Incentive Payment: Saskatchewan

Saskatchewan residents will receive the following CAI payments in 2023-24:

Annual

  • First Adult: $680
  • Second Adult: $340
  • Each child under 19: $170
  • Family of 4: $1360

Quarterly

  • First Adult: $170
  • Second Adult: $85
  • Each child under 19: $42.50
  • Family of 4: $340

Climate Action Incentive Payment in Alberta

For 2023-24, the Alberta program provides the following benefit for residents of that province:

Annual

  • First Adult: $772
  • Second Adult: $386
  • Each child under 19: $193
  • Family of 4: $1544

Quarterly

  • First Adult: $193
  • Second Adult: $96.50
  • Each child under 19: $48.25
  • Family of 4: $386

How Climate Action Incentive Payments Work for Atlantic Provinces

In 2023, Nova Scotia, PEI, and Newfoundland & Labrador residents will begin to receive climate action incentive payments. In future years, the first payment each year will arrive in April, but for 2023 they will begin in July. The three provinces are ineligible for the April payment because their fuel surcharges don’t come into effect until July 1, 2023.

Here are the annual and quarterly payment amounts. (The annual figures are calculated based on four quarterly payments, though there will only be three for 2023.):

CAIP Nova Scotia

Annual

  • First Adult: $496
  • Second Adult: $248
  • Each child under 19: $124
  • Family of 4: $992

Quarterly

  • First Adult: $124
  • Second Adult: $62
  • Each child under 19: $31
  • Family of 4: $248

CAIP PEI

Annual

  • First Adult: $480
  • Second Adult: $240
  • Each child under 19: $120
  • Family of 4: $960

Quarterly

  • First Adult: $120
  • Second Adult: $60
  • Each child under 19: $30
  • Family of 4: $240

Note: The payment amounts for PEI include the 10% supplement for small and rural communities, as all residents in that province are eligible.

CAIP Newfoundland & Labrador

Annual

  • First Adult: $656
  • Second Adult: $328
  • Each child under 19: $164
  • Family of 4: $1312

Quarterly

  • First Adult: $164
  • Second Adult: $82
  • Each child under 19: $41
  • Family of 4: $328

Why Do We Have a Carbon Tax Rebate?

As you may be aware, the federal government has applied a federal pollution pricing system, aka carbon tax, as a way to fight climate change, limit our reliance on fossil fuels, and reduce greenhouse gas emissions.

Carbon taxes are collected from industries and also through fuel charges that regular Canadians pay when they fill up at the gas pump. For example, fuel charges in Ontario, Manitoba, Saskatchewan, and Alberta currently add $0.11 per litre of gas. Carbon tax rebates like the CAI are meant to offset those costs. The following table shows the planned fuel charge rates for 2023-2030. You’ll notice that the rates will increase substantially between now and then.

Final Thoughts

Canadian drivers feel the pressure when prices rise at the gas pumps, even for a good cause, like fighting climate change. But Canadian families shouldn’t feel the burden, especially when they’re already dealing with high inflation. That’s why the climate action incentive payment is so critical, as it provides some relief for Canadians who are feeling the financial pinch.

If you live in a qualifying province and haven’t received a CAI payment, make sure you’ve completed a 2021 tax return and are eligible. If so, reach out to the CRA to ensure you receive the credit.

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