Are you wondering how much you’ll receive for the Climate Action Incentive Payment in 2023?
The Climate Action Incentive payment is a refundable tax credit designed to encourage Canadian households to take action to reduce their carbon footprint and fight climate change.
The incentive was first introduced in 2018 for residents of Saskatchewan, Manitoba, and Ontario. In 2019, the tax credit was opened up to Alberta residents as well. This year, the government plans to add Nova Scotia, PEI, and Newfoundland and Labrador to the list.
Below, I’ll give you a bit more background on this tax credit, explain who’s eligible, and how much you could receive.
The Climate Action Incentive: Overview
The Climate Action Incentive Payment (CAIP) is part of the federal government’s pollution pricing plan, which aims to reduce greenhouse gas emissions and transition Canada to a low-carbon economy.
Essentially, the government applies a small tax to customers purchasing fuel at the pump. The CAIP is a federal rebate designed to offset this tax by offering a payment (or tax credit) to individuals and families within the following provinces:
- Alberta
- Saskatchewan
- Manitoba
- Ontario
- Prince Edward Island (effective July 2023)
- Nova Scotia (effective July 2023)
- Newfoundland and Labrador (effective July 2023)
The payment amount varies from one province to the next and also depends on the number of dependents and adults living in each household.
Payments are issued on a quarterly basis, so eligible households can expect to receive four payments per year issued via direct deposit to their bank accounts (just like similar child and family benefits, such as the CCP).
To support small fisheries and agriculture, commercial fishing businesses and farmers are exempt from paying the federal fuel charge on fuel used for fishing or farming-related activities.
How Much Is The Climate Action Incentive Payment In 2023?
The amount of your CAIP payment depends on which province you live in, the number of children/dependents living with you, and how many adults are in the household.
In the tables below, it’s assumed that the first adult is the head of the household and the second adult is the spouse or common-law partner.
Here’s a quick breakdown of how much you could receive from the CAIP payment in each province for 2023, depending on these factors.
The CAIP payments will be issued quarterly in the following months:
- April 2023
- July 2023
- October 2023
- January 2024
- April 2024
- July 2024
- October 2024
Newfoundland and Labrador, Nova Scotia, and PEI residents will only receive three payments in 2023, as the CAIP won’t go into effect in these provinces until July 2023. As a result, residents of these provinces won’t receive the first quarterly payment issued in April.
Next year, though, these individuals will be eligible to receive four full quarterly payments.
Alberta
Here’s how much Alberta residents could receive for their quarterly CAIP payment in 2023, based on their household:
| Alberta | |
| Household | CAIP Payment Amounts |
| First Adult | $193 |
| Second Adult | $96.50 |
| Each Child | $48.25 |
| Family of Four | $386 |
Manitoba
Here’s how much Manitoba residents could receive for their quarterly CAIP payment in 2023, based on their household:
| Manitoba | |
| Household | CAIP Payment Amounts |
| First Adult | $132 |
| Second Adult | $66 |
| Each Child | $33 |
| Family of Four | $264 |
Ontario
Here’s how much Ontario residents could receive for their quarterly CAIP payment in 2023, based on their household:
| Ontario | |
| Household | CAIP Payment Amounts |
| First Adult | $122 |
| Second Adult | $61 |
| Each Child | $30.50 |
| Family of Four | $244 |
Saskatchewan
Here’s how much Saskatchewan residents could receive for their quarterly CAIP payment in 2023, based on their household:
| Saskatchewan | |
| Household | CAIP Payment Amounts |
| First Adult | $170 |
| Second Adult | $85 |
| Each Child | $42.50 |
| Family of Four | $340 |
Newfoundland and Labrador
Here’s how much residents of Newfoundland and Labrador could receive for their quarterly CAIP payment in 2023, based on their household:
| Newfoundland and Labrador | |
| Household | CAIP Payment Amounts |
| First Adult | $164 |
| Second Adult | $82 |
| Each Child | $41 |
| Family of Four | $328 |
Nova Scotia
Here’s how much Nova Scotia households could receive for their quarterly CAIP payment in 2023:
| Nova Scotia | |
| Household | CAIP Payment Amounts |
| First Adult | $124 |
| Second Adult | $62 |
| Each Child | $31 |
| Family of Four | $248 |
Prince Edward Island
Here’s how much PEI residents could receive for their quarterly CAIP payment in 2023, based on their household:
| Prince Edward Island (PEI) | |
| Household | CAIP Payment Amounts |
| First Adult | $120 |
| Second Adult | $60 |
| Each Child | $30 |
| Family of Four | $240 |
Why Are Payments Different In Each Province?
CAIP payment amounts differ from one province to the next based on fossil fuel usage and the primary industries in each province.
The locale where the household is located also affects the CAIP payment amounts.
For example, taxpayers living in small and rural communities of these provinces are eligible to receive an additional 10% CAIP payment, as they typically use more fuel due to the lack of public transportation in these areas and the fact that they’re located further away from city centres.
Can I Receive The Climate Action Incentive Payment If I Owe Money To The CRA?
Unfortunately, if you owe money to the CRA from a previous year’s tax return or another unsettled tax debt, you may not receive the CAIP. The benefit amount will automatically be applied to your previous balance with the CRA.
If there is any additional CAIP credit left after being applied to your tax debts, you’ll receive the remaining balance via direct deposit to your financial institution.
How To Apply For The Climate Action Incentive Payment?
Certain tax credits and government payments (such as Ontario’s ODSP, for example) require taxpayers to complete separate paperwork and forms to receive a payment.
However, the Climate Action Incentive Payment is automatically applied to eligible Canadians based on the size of their household and primary residence.
The payment should be issued quarterly, based on the information you provided in your previous year’s tax returns.
If you did not receive a CAIP payment, it may be because the province you reside in isn’t eligible for the Climate Action Incentive or because you haven’t filed your tax returns yet.
Refundable vs Non-Refundable Tax Credits
Above, I mentioned that the Climate Action Incentive Payment is a refundable tax credit, as opposed to a non-refundable credit. Here’s a quick breakdown of the difference between the two types of tax credits so you can better determine your eligibility.
A refundable tax credit is one that you can receive as a cash refund if the credit amount is greater than your total tax liability. In other words, even if you owe no income tax, you can still get money back from the government.
Some common examples of this include the GST/HST tax credit and the Canada Workers Benefit.
On the other hand, non-refundable tax credits can only reduce your tax liability to zero. Any excess credit amount is not refundable. These credits essentially lower your taxable income, but if you owe no taxes, you won’t benefit from a cash refund.
Since the CAIP is a refundable tax credit, this means that you’ll be eligible to receive a payment after filing your personal income tax returns, even if you’ve already reduced your tax liability to zero using other tricks to reduce your tax burden.
When Was The Climate Action Incentive Launched In Canada?
In December 2019, the federal government announced that it would begin issuing Climate Action Incentive Payments in 2020, based on Candians’ 2019 tax returns.
At first, the CAIP was a one-time annual payment issued as part of the tax filing and tax return process. The CAIP payment was issued directly as a tax refund or applied to taxpayers’ existing balances with the Canada Revenue Agency (CRA).
In 2022, however, the government announced it would begin issuing quarterly payments to help offset the rising costs of fuel and food in the country.
What Is Pollution Pricing In Canada?
Pollution pricing is a policy approach used by the Canadian government to reduce greenhouse gas (GHG) emissions and fight the effects of climate change.
The goal of pollution pricing is to encourage Canadian individuals and businesses to reduce their carbon footprint by taxing the pollution they create through fossil fuel usage.
Pollution pricing is a crucial policy tool in the fight against climate change. The Canadian government has committed to increasing the price of carbon emissions over time to help meet its targets for reducing GHG emissions.
In a similar vein, the government (and certain provinces) are also offering tax credits and rebates for individuals who purchase zero-emission vehicles, such as EVs or hydrogen fuel cell-powered vehicles.
The revenues generated from the pollution pricing system are returned to Canadians through measures such as the Climate Action Incentive payment, which provides a refundable tax credit to households in provinces where the backstop carbon pricing system applies.
The revenues are also invested in initiatives that support clean energy and help businesses transition to a low-carbon economy.
In the words of Bill Morneau, Canada’s Minister of Finance:
“Putting a price on carbon pollution is the most effective and efficient way to reduce the greenhouse gas emissions associated with climate change, but Canadians are also concerned about what that price might mean for their own pocketbooks.
That’s where the Climate Action Incentive payments come in. Most households will receive more money back through these payments than what they will pay out due to federal pollution pricing—helping families to make ends meet as we move toward a cleaner future.”
CAIP Extending To PEI, Nova Scotia, Newfoundland and Labrador (July 2023)
In 2022, PEI, NS, and NL residents were all deemed ineligible for the CAIP payments. However, the Canadian government is opening these provinces up to receive the CAIP payment beginning July 2023.
Since it’s the first year, these provinces will only receive three quarterly payments. Beginning in 2024, though, residents living in PEI, NS, or NL can expect to receive four quarterly payments.
New Brunswick To Join CAIP Plan
Effective July 1st, 2023, New Brunswick has decided to join the federal backstop plan. Moving into 2024, this means that New Brunswick residents will be eligible to receive quarterly CAIP payments.
In October 2023, eligible beneficiaries can expect to receive a double CAIP payment meant to cover both July and October benefit payments. The reason for the double payment is that the agreement was settled after July CAIP payments to other provinces had already gone into effect.
After this, New Brunswick residents will receive a single CAIP payment in January 2024, following the standard payment schedule for other provinces enrolled in the federal backstop program.
Prior to this change, the province had a previous carbon tax system in place. However, this system didn’t offer the same benefits to individual taxpayers and families.
Is The CAIP The Same As The Climate Action Incentive (CAI) Rebate?
The CAIP was designed to replace the CAI rebate. The CAI rebate was first announced at the end of 2019 and provided a one-time lump sum payment in the form of a tax rebate based on a household’s income tax returns.
In 2022, though, the government announced that it would be replacing this annual lump sum payment with a quarterly payment, which would be called the Climate Action Incentive Payment.
How The CAIP Could Change In Future Years
The CAIP’s structure and rates may evolve in coming years as a response to a number of factors.
As the federal government ratchets up its carbon pricing to meet Canada’s climate target to reach net-zero emissions by 2050, the CAIP could potentially see an increase in its rates to ensure that households are not overly burdened by rising costs.
Additionally, political pressures could affect changes in the CAIP.
For example, a change in government could either lead to an expansion or contraction of the program based on climate change philosophies.
Public opinion and feedback may also shape future iterations of the CAIP, potentially leading to reforms that make it more equitable or effective in driving sustainable choices.
Lastly, as more provinces implement their own carbon pricing mechanisms compliant with federal guidelines, the geographical applicability of the CAIP may change (as it did with PEI, Nova Scotia, and Newfoundland and Labrador this past summer).
Final Thoughts on the CAIP
As Canada moves to reduce its carbon footprint, we can likely expect to see more incentives, tax rebates, and discounts for taking climate-positive actions.
Recently, the Minister of Environment and Climate Change, Steven Guilbeault announced Canada’s plan to mandate that 100% of all new vehicles sold be zero-emission vehicles by 2035.
The good news is that it appears the government plans to reward Canadian taxpayers and businesses for complying with these new changes.
Looking to take advantage of even more energy rebates? Be sure to read my post on Ontario’s Energy Rebates next!
