Canada Repays Households Hundreds Of Dollars For The Carbon Tax — Here's How It Works

Quebec, of course, has its own program.

Staff Writer
A gas station pump in Port Coquitlam, British Columbia.

A gas station pump in Port Coquitlam, British Columbia.

Pollution pricing may sound like a capitalist hell term, and in many ways, it is! Canada's system of charging a premium on polluting materials that contribute to climate change is intended to discourage their use and incentivize innovation that lessens dependence on them. Thankfully for the average Canadian's bank account, the feds also have a system of returning some of that lost income back to residents through what's called the Climate Action Incentive Payment program, which is expanding to more provinces later in 2023.

What is the Climate Action Incentive Payment?

The Climate Action Incentive Payment (CAIP) program is a tax-free reimbursement for the federal fuel charge, often called the carbon tax. This carbon tax system is intended to inspire innovation and reduce Canadian reliance on fossil fuels and other pollutants.

To be eligible, according to the federal government's benefits page, individuals must be residents of Canada for income tax purposes "in the month before and at the beginning of the month in which the CRA [Canada Revenue Agency] makes a payment."

The CRA delivers the payment via a quarterly installment on April 15, July 15, October 15 and January 15.

The installment amounts are not tied to net income, meaning eligible households of all income levels will receive the full payouts applicable to their living situation.

Where does the Climate Action Incentive Payment program apply?

The CAIP is currently applicable in four provinces: Ontario, Manitoba, Saskatchewan and Alberta. Starting in July 2023, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador residents will also receive CAIPs, as these provinces' federal fuel charges kick in.

How much are eligible households now receiving?

In Ontario, individuals receive $488 and couples (spouse/common-law partner) receive the individual amount plus $244. Ontario households also get $122 for each child under the age of 19. Manitoba residents receive $528 as individuals, that amount plus $264 as couples, and $132 per child under 19. In Saskatchewan, residents receive $680; couples, $680 plus $340; and $170 for each child under 19.

Alberta's program is the most lucrative, with a $772 payout for an individual Alberta resident, $772+$386 for couples and $193 per child under 19.

These numbers are the total across the entire year.

Individual residents of the three provinces joining the program as of July 2023 will receive a quarterly CAI payment of $120 (PEI), $124 (Nova Scotia) or $164 (Newfoundland and Labrador).

What is Quebec's alternative to the federal incentive program?

Quebec's current pollution pricing setup, a cap-and-trade system, meets the federal benchmark for stringency, meaning the feds don't think it's necessary to introduce a reimbursement program in the province. The cap-and-trade system means that polluting enterprises are able to turn lower pollution levels into financial wins, encouraging innovation, in theory.

This system means individual Quebecers won't receive any payouts, but that's because we're not paying a premium on our pollution, the businesses are.

This article's cover image was used for illustrative purposes only.

Willa Holt
Staff Writer
Willa Holt is a Staff Writer for MTL Blog, often found covering weird and wonderful real estate and local politics from her home base in Montreal.