Carbon Tax Rebate 2024 – The Lowdown on The Carbon Tax Rebate

WRITTEN BY Dan Kent | UPDATED ON: April 5, 2024

Carbon Tax Rebate

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The Liberal Government has implemented a variety of policies that will aid diligent Canadians.

Unlike the Canadian Grocery Rebate, One of Prime Minister Justin Trudeau's most controversial policies is the implementation of the so-called Carbon Tax. Let's talk about it, along with the carbon tax rebate you can expect to receive in this article.

What is the carbon tax in Canada?

Here's how the federal carbon tax works. The federal government places a price on carbon dioxide emissions to reduce the greenhouse gases that cause climate change. Provinces can either use the federal system -- as many provinces have opted to do -- or create their own provincial system. 

Who pays carbon tax in Canada?

For the most part, everyone. Consumers are forced to pay carbon taxes for things like gasoline, natural gas, electricity, and more, with the biggest and most controversial being the federal fuel charge.

This tax currently stands at approximately $0.14 per litre in many provinces. It is slated to increase steadily to $0.37 per litre by 2030. 

The federal government applies a price to pollution in places with no provincial or territorial carbon tax. The provinces that collect their own carbon taxes can run their own plans. 

The government invites Canadians to minimize their carbon tax expenditures by riding their bikes more often, keeping the heat a few degrees colder in the winter, or insulating their homes better. 

There are various criticisms of the carbon tax, including those who say it disproportionately impacts folks in rural Canada or people who can't really walk, bike, or take public transit. It is much easier for someone living in Downtown Toronto to minimize their carbon footprint than it is for someone living in rural Saskatchewan.

Plus, many of these critics just plain don't trust the government. There are also criticisms that certain provinces -- Quebec, mostly -- have gotten off easy because it has outsized influence over the federal government.

But the carbon tax is here, and barring a change in government, it's here to stay. Besides, it's not really so bad. Most Canadians end up being net beneficiaries of the carbon tax since most of the dollars paid into the kitty come from big industries, not regular folks, even if the price at the pump may hurt.

Canadians end up beneficiaries through the carbon tax rebate. Let's look at how this works in 2023 and, most importantly, just how much you can expect to get. 

What is the Canada Climate Action Incentive (CAI) payment?

The Government of Canada is committed to sharing its carbon pricing windfall with Canadian families via quarterly Climate Action Incentive Payments (CAIP). 

There's no special application process to get these payments, either. You're automatically enrolled as long as you submit your tax returns to the Canada Revenue Agency.

Those who have already opted for direct deposit will automatically have their payment deposited into their account. The CRA will mail your cheque if you haven't registered for direct deposit. 

The payment process for CAIP is very similar to applying for GST payments. It's automatic as you file your taxes. 

In a household where both spouses submit tax returns, CAIP benefits automatically go to the spouse whose tax return gets filed first. 

Payments come four times yearly -- January, April, July, and October. The payment amount is set annually and changes based on how much the government collects taxing carbon, your family situation, and more. 

Before 2021, the Climate Action Incentive was a refundable tax credit claimed yearly on personal income tax returns. The current system was instituted in 2022, with beneficiaries receiving quarterly payments. 

Who qualifies for the Climate Action Incentive payment?

Every resident of Canada is eligible for this credit, as long as they were a resident for income tax purposes in the month before the beginning of the month when the CRA makes a payment. You must also be a resident of an eligible CAIP province. 

Everyone can receive payments, but the program is geared toward those with a family. Individuals get a certain amount, their spouse (or common-law partner) gets a certain amount, and each child gets a certain amount, paid together every quarter.

Single-parent households get more than households with both parents, at least on a per-child basis. 

People who live in rural communities -- defined as a city with 100,000 people or less, with 50,000 or more living in the core -- were getting an extra 10% as a rural supplement. This will increase to an extra 20% starting in April 2024. 

Note there is no income limit, at least for provinces that follow the federal plan. Every person that meets the eligibility requirements will get the same amount. Even if your family's net income is in the millions, you'll get the same amount as someone just above the poverty line. 

How much can you expect to receive?

Each province's program is slightly different, depending on the specific deal with the federal government and the amount of tax collected from carbon emitters there. 

How much is the climate action incentive payment in Alberta?

Alberta has the most generous payouts in the country. For the 2023 base year, residents of Alberta can expect to receive the following:

  • First adult: $193
  • Second adult: $96.50
  • Each child: $48.25
  • Family of 4: $386

These payments come each quarter. The 2024-25 base year payments will be announced sometime in the first quarter of 2024, with the first payment on April 1st. 

How much is the climate action incentive payment in Manitoba?

Here's how much citizens of that province can expect each quarter:

  • First adult: $132
  • Second adult: $66
  • Each child: $33
  • Family of 4: $264

How much is the climate action incentive payment in Ontario?

Here's what Ontarians can expect from their carbon tax payments each quarter:

  • First adult: $122
  • Second adult: $61
  • Each child: $30.50
  • Family of 4: $244

How much is the climate action incentive payment in Saskatchewan?

Saskatchewan residents can expect the following each quarter. Note they get a little more than Manitoba or Ontario because the province has more oil and gas activity. 

  • First adult:$170
  • Second adult: $85
  • Each child: $42.50
  • Family of 4: $340

Each of the preceding four provinces has 2023 payments scheduled for April, July, October, and January 2024. 

Maritime Provinces

Since the federal fuel charge will only come into effect as of July 1st, 2023, in Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, residents of these provinces will receive three equal quarterly payments for 2023 and then four payments per year after that. 

How much is the climate action incentive payment in Nova Scotia?

  • First adult: $124
  • Second adult: $62
  • Each child: $31
  • Family of 4: $248

How much is the climate action incentive payment in Newfoundland and Labrador?

  • First adult: $164
  • Second adult: $82
  • Each child: $41
  • Family of 4: $328

How much is the climate action incentive payment in Prince Edward Island?

Note that all of PEI is considered rural, so every person residing on the island automatically receives the rural supplement.

  • First adult: $120
  • Second adult: $60
  • Each child: $30
  • Family of 4: $240

How much is the climate action incentive payment in New Brunswick?

Residents of New Brunswick can expect the following carbon tax rebate payments:

  • First adult: $92
  • Second adult: $46
  • Each child: $23
  • Family of 4: $184

How much is the climate action incentive payment in British Columbia?

British Columbia has its individual provincial program, each with specific rules, and administered by the CRA. The big difference in B.C.'s version is the clawback system.

Folks who are under the maximum income requirements -- which were $39,115 for individuals and $50,170 for families -- are entitled to a rebate amount of $447 for the first adult, $223.50 for a spouse (or common-law partner), and $111.50 per child per year, except the first child of a single-parent family, who gets treated as a second adult.

Everyone else's benefits get reduced depending on how much the family income exceeds the threshold. For example, a married couple with two children would see their climate action tax credit clawed back to zero if the family's net income exceeds $94,845.

The other provinces and territories in Canada

Quebec, Yukon, Northwest Territories, and Nunavut don't participate in the CAIP because the federal government doesn't collect gas taxes in each location. Each of the territories has individual plans that ease the burden on their citizens, with Yukon even pledging to give back every nickel it collects in carbon taxes to its people.

Quebec, on the other hand, has a cap and trade system, with proceeds going into the Quebec Green Fund, which is used to fund projects to fight climate change.