Payment (CAIP) is a tax-free quarterly benefit provided to Canadian residents living in Alberta, Manitoba, Ontario, or Saskatchewan. This payment is designed to help individuals and families counter the cost of federal pollution pricing. This guide will explore everything you need to know about the CAIP, including eligibility criteria, how to apply, payment dates, and more.
What is the Climate Action Incentive Payment?
The Climate Action Incentive Payment (CAIP) is a tax-free monetary amount aimed at assisting Canadian residents in offsetting the cost of federal pollution pricing. It consists of a basic amount and a supplement for residents of rural and small communities. Prior to 2022, the CAIP was known as the Climate Action Incentive (CAI), which was a refundable tax credit claimed on annual personal income tax returns. However, since 2022, the CAIP is made directly to your bank account on a quarterly basis.
Eligibility for the Climate Action Incentive Payment
To be eligible for the Climate Action Incentive Payment, you must be a resident of Alberta, Manitoba, Ontario, or Saskatchewan on the first day of the payment month. Additionally, you must meet one of the following criteria:
- Be 19 years of age or older
- Have (or previously had) a common-law partner or spouse
- Be (or previously were) a parent living with your child
It is important to note that if you do not meet these eligibility requirements or if you do not reside in one of the eligible provinces, you will not be eligible for the CAIP. However, other provinces may offer carbon tax rebates, which we will discuss later in this guide.
How to Apply for the Climate Action Incentive Payment
The process of applying for the Climate Action Incentive Payment is straightforward. As a resident of Canada, you do not need to submit a separate application for the CAIP. The Canada Revenue Agency (CRA) will automatically determine your eligibility based on the information provided in your income tax and benefit return. If you have a common-law partner or spouse, only one of you can receive the credit for the family, and it will be paid to the individual whose tax return is filed first.
Residents of rural and small communities may be eligible for a supplement included in the CAIP. To claim this supplement, you will need to complete Schedule 14 and submit it along with your income tax and benefit return. However, residents of Prince Edward Island do not need to claim the rural supplement on their tax return, as it is already included in the basic amount.
Climate Action Incentive Payment Amounts for 2023
The amount of the Climate Action Incentive Payment varies depending on your family situation and the province in which you reside. The payment amounts for the 2023-2024 period are as follows:
- First Adult: $488
- Spouse/Common-law Partner: $244
- Dependent Child: $122
- First Child in a Single-parent Family: $244
- First Adult: $528
- Spouse/Common-law Partner: $264
- Dependent Child: $132
- First Child in a Single-parent Family: $264
- First Adult: $680
- Spouse/Common-law Partner: $340
- Dependent Child: $170
- First Child in a Single-parent Family: $340
- First Adult: $772
- Spouse/Common-law Partner: $386
- Dependent Child: $193
- First Child in a Single-parent Family: $386
These amounts are subject to change each year, and it is important to note that the CAIP is a universal payment that is not based on adjusted family net income.
Climate Action Incentive Payment Dates for 2023
The Climate Action Incentive Payment is distributed on a quarterly basis. In 2023, the payment dates are as follows:
- January 13, 2023
- April 14, 2023
- July 14, 2023
- October 13, 2023
If you receive your tax refund via direct deposit, you can expect to receive your CAIP in the same manner. It will appear in your bank account as “Climate Action Incentive” or a similar description, depending on your financial institution.
Carbon Tax Rebates in Canada
While the Climate Action Incentive Payment is available in Alberta, Manitoba, Ontario, and Saskatchewan, other provinces in Canada have implemented their own systems for carbon tax rebates. Here is an overview of the carbon tax rebate systems in some other provinces:
British Columbia has a carbon tax incorporated into the province’s pricing system. Residents of British Columbia can receive an annual climate action tax credit, which is a tax-free payment aimed at helping families and individuals with low incomes offset the carbon taxes they pay.
Quebec & Nova Scotia
Quebec and Nova Scotia have implemented cap-and-trade systems, establishing emissions caps for industries. Companies that exceed these caps must purchase credits from a carbon market. However, there is no federal rebate program in these provinces.
New Brunswick has its own system that allows for higher pollution thresholds while maintaining price per tonne standards. As a result, residents of New Brunswick are eligible to receive Climate Action Incentive Payments.
Prince Edward Island (PEI)
PEI has implemented its own carbon tax on most gaseous and liquid fuels. While there is currently no rebate program in place, the province intends to establish its own rebate program in the near future.
Newfoundland & Labrador
Newfoundland and Labrador have reduced their gas tax to offset higher gas prices, adopting a similar approach to PEI.
The Northwest Territories have their own territorial carbon tax, charging $40 per tonne. They offer a 100% rebate on home heating fuel.
Yukon and Nunavut
Yukon has implemented a carbon tax and offers rebates, while Nunavut is part of the federal carbon tax plan and does not have its own rebate program.
It is important to check with the specific province you reside in to understand the carbon tax rebate program available.
The Climate Action Incentive Payment (CAIP) is a valuable benefit for Canadian residents living in Alberta, Manitoba, Ontario, or Saskatchewan. This tax-free payment is designed to help individuals and families offset the cost of federal pollution pricing. By understanding the eligibility criteria, payment amounts, and application process, you can ensure you receive the CAIP as part of your financial support. Additionally, it is important to be aware of the carbon tax rebate programs available in other provinces across Canada. Stay informed and make the most of the financial resources available to you through the CAIP and related initiatives.