Key Takeaways
- The carbon tax rebate, also known as the climate action incentive payment (CAIP), is a tax-free amount that helps eligible individuals and families offset the cost of the federal pollution pricing.
- The CAIP is available to residents of Alberta, Manitoba, Ontario, Saskatchewan, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island, where the federal fuel charge applies.
- The CAIP is paid quarterly in January, April, July, and October. The amount varies by province and family size, and includes a 10% supplement for residents of small and rural communities.
- The CAIP is meant to encourage Canadians to make cleaner choices and reduce their greenhouse gas emissions, while supporting economic growth and environmental protection.
What is the Carbon Tax Rebate?
The carbon tax rebate, officially known as the climate action incentive payment (CAIP), is a tax-free amount that helps eligible individuals and families offset the cost of the federal pollution pricing. It consists of a basic amount and a supplement for residents of small and rural communities1.
The federal pollution pricing, also known as the carbon tax or the fuel charge, is a policy that applies a price on carbon-based fuels, such as gasoline, diesel, natural gas, and propane, to reduce greenhouse gas (GHG) emissions and fight climate change. The federal government does not keep any direct proceeds from the fuel charge. Instead, it returns them to the province or territory of origin, mainly through the CAIP2.
The CAIP is available to residents of Alberta, Manitoba, Ontario, Saskatchewan, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island, where the federal fuel charge applies. These provinces do not have their own carbon pollution pricing systems that meet the federal standard. Residents of other provinces and territories are not eligible for the CAIP, as they either have their own provincial carbon tax or are working on a compatible system3.
How to Get the CAIP?
To get the CAIP, you need to file your annual tax return. The Canada Revenue Agency (CRA) will automatically assess your eligibility and notify you of the amount you will receive. You do not need to apply for the CAIP or fill out any forms1.
However, if you live in a small or rural community, you need to check the box on page 2 of your tax return to indicate that you are eligible for the 10% supplement. This supplement is relevant everywhere except for Prince Edward Island, where all residents automatically receive it4.
The CAIP is paid quarterly in January, April, July, and October. You can choose to receive it by direct deposit or cheque. The first payment was made in July 2022, and the next one will be in April 2023. The payment amount is based on your 2022 tax return1.
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How Much is the CAIP?
The amount of the CAIP varies by province and family size. It also depends on whether you live in a small or rural community or not. The table below shows the estimated CAIP amounts for 2023-24, based on the latest information from the Department of Finance Canada5.
| Province | Single adult or first adult in a couple | Second adult in a couple or first child of a single parent | Each child under 18 (maximum of 4 children) | Single parent or couple with 2 children |
| Alberta | $339 | $169 | $85 | $678 |
| Manitoba | $243 | $121 | $61 | $486 |
| Ontario | $224 | $112 | $56 | $448 |
| Saskatchewan | $405 | $202 | $101 | $810 |
| Nova Scotia | $143 | $72 | $36 | $287 |
| Newfoundland and Labrador | $172 | $86 | $43 | $344 |
| Prince Edward Island | $172 | $86 | $43 | $344 |
Note: These amounts include the 10% supplement for residents of small and rural communities. If you do not qualify for the supplement, your CAIP amount will be 10% lower.
What is the Purpose of the CAIP?
The purpose of the CAIP is to provide Canadians with extra funds to ease the burden of higher taxation and pricing. The program benefits eight out of ten households, with some receiving more than they spent on the fuel charge. Farmers can access incentives and rebates, while rural or remote Canadians may qualify for a bonus payment as well6.
The CAIP is also meant to encourage Canadians to make cleaner choices and reduce their GHG emissions, which contribute to global warming and climate change. By putting a price on carbon, the federal government aims to create a market incentive for individuals and businesses to switch to low-carbon alternatives, such as renewable energy, electric vehicles, and energy-efficient appliances7.
The CAIP is part of the federal government’s climate change plan, which includes other measures, such as investing in green infrastructure, supporting clean innovation, and phasing out coal-fired electricity. The plan’s goal is to achieve net-zero emissions by 2050 and meet Canada’s commitments under the Paris Agreement8.
Latest Update on Carbon Tax Rebate
The carbon tax rebate, or the CAIP, is subject to change as the federal government adjusts its pollution pricing system and responds to the evolving situation of climate change. Here are some of the latest updates on the carbon tax rebate:
- In November 2022, the federal government announced the CAIP amounts for 2023-24, which reflect the increase in the fuel charge from $40 per tonne of carbon dioxide equivalent (tCO2e) in 2022 to $50 per tCO2e in 2023 and $60 per tCO2e in 20245.
- In July 2023, the federal fuel charge will come into effect in Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, where the provincial governments have agreed to adopt the federal system. Residents of these provinces will start receiving the CAIP in July 2023, which will include the amount for April 2023 as well5.
- In December 2023, the federal government will review the pollution pricing system and consult with provinces and territories, Indigenous peoples, and stakeholders on the next steps. The review will consider the effectiveness and impacts of the system, as well as the progress and actions of other jurisdictions9.
Are You Getting It?
If you are a resident of one of the provinces where the federal fuel charge applies, you are likely eligible for the CAIP. However, there are some exceptions and conditions that may affect your eligibility. For example, you are not eligible for the CAIP if you are:
- A non-resident of Canada
- Incarcerated in a correctional institution for a term of at least 90 days
- Enrolled at an educational institution that provides you with lodging
- Claimed as a dependant by someone else
- A person who is exempt from paying income tax in Canada1
To find out if you are eligible for the CAIP and how much you can expect to receive, you can use the CRA’s online calculator10. You can also contact the CRA at 1-800-959-8281 for more information.
Conclusion
The carbon tax rebate, or the CAIP, is a tax-free payment that helps eligible Canadians offset the cost of the federal pollution pricing. It is available to residents of Alberta, Manitoba, Ontario, Saskatchewan, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island, where the federal fuel charge applies. The CAIP is paid quarterly and varies by province and family size. The purpose of the CAIP is to encourage Canadians to make cleaner choices and reduce their GHG emissions, while supporting economic growth and environmental protection. The CAIP is subject to change as the federal government adjusts its pollution pricing system and responds to the evolving situation of climate change. To get the CAIP, you need to file your tax return and check your eligibility and amount with the CRA.