How to Make the Most of Your Carbon Tax Rebate in 2024
January 12, 2024Table of Contents Contents
We all know it’s crucial, for ourselves and future generations, that we act now to help protect the environment. There are lots of tools we can use in the fight against climate change, and it turns out your wallet is one of the most effective.
That’s the core concept behind carbon taxes. Basically, it’s a system for putting a price on pollution, which encourages people and businesses to find ways to reduce emissions that harm the environment.
In the summer of 2018 Canada’s federal government installed a carbon tax, which implemented a carbon pricing system in any provinces that didn’t already have a suitable system in place. This led to higher prices for fossil fuel energy sources like the gasoline you pump into your car or the natural gas you use to heat your home. (For a detailed explanation of the carbon tax and how it works, check out the Canada Drives blog post Carbon Taxes and Rebates in Canada Explained.)
To offset these higher costs, the federal government provides carbon tax rebates which, for some people, will surpass the higher fuel prices so they’ll end up saving money in the end.
How does the carbon tax rebate work?
The simple answer is: it depends on which province you live in. Some of the provinces, like B.C. and Quebec, created their own carbon pricing systems before the federal government stepped in. The provinces of Alberta, Saskatchewan, Manitoba, and Ontario are required to use the federal government’s carbon tax system, although some of them are currently contesting this in court. In Febuary 2020, for example, Alberta's Court of Appeal declared the federal carbon tax unconstitutional and "illegal" because it intrudes on provincial jurisdiction.
Here’s a quick breakdown of how the carbon tax rebate works in each province:
| PROVINCE | CARBON TAX REBATE DETAILS | GOVERNMENT WEBSITE LINK (for more details) |
| Alberta | $1,544 for a family of four
$772 for a single adult | Alberta carbon levy and rebates |
| British Columbia | Up to $447 for an individual, $223.50 for a spouse, or common-law partner, $111.50 for a child
Rebate payment included in quarterly GST/HST credit | BC climate action tax credit |
| Manitoba | $1,056 for a family of four
$528 for a single adult Rebate payment included in federal tax return | Manitoba and pollution pricing |
| Newfoundland and Labrador | $1,312 for a family of four
$656 for a single adult | Newfoundland and Labrador carbon pricing plan |
| New Brunswick | No federal rebate | New Brunswick Climate Change Action Plan |
| Northwest Territories | $308 per adult and $308 per child | Implementing the NWT Carbon Tax |
| Nova Scotia | $992 for a family of four
$496 for a single adult | Nova Scotia and pollution pricing |
| Nunavut | No federal rebate | Nunavut and pollution pricing |
| Ontario | $976 for a family of four
$488 for a single adult Rebate payment included in federal tax return | Ontario and pollution pricing |
| Prince Edward Island | $960 for a family of four
$480 for a single adult Discounts on some public programs | P.E.I. saving you money while helping the environment |
| Quebec | No federal rebate
Uses cap-and-trade system | Climate Change Action Plan |
| Saskatchewan | $1360 for a family of four
$680 for a single adult Rebate payment included in federal tax return | A Made-in-Saskatchewan Climate Change Strategy |
| Yukon | No federal rebate | Yukon and pollution pricing |
When do I get my carbon tax rebate?
For most of the provinces that provide carbon tax rebates, getting the rebate is pretty simple. All you have to do is file your taxes and the rebate will be included in your tax return — aside from B.C., where the rebate accompanies the quarterly GST/HST credit.
If you need more details, check out the link for your province in the table above.
Using the carbon tax rebate to save
According to the federal government’s calculations, most Canadians who qualify for a carbon tax rebate will actually end up receiving more money than they pay through carbon taxes. This provides a good opportunity to increase your savings (or start saving if you haven’t already).
Save money without lifting a finger
One of the easiest ways to sock away some funds for the future is to set up a separate savings bank account. You can transfer your carbon tax rebate into this new account to get it started, or to give it a boost. Then get your bank to set up an automatic transfer system to divert a small chunk of money into the savings account with every paycheque. Eventually, you won’t even notice the diverted funds and the savings will grow over time.
Compounding interest: The magical way to increase your savings
If you’re not familiar with the concept of compounding interest, it basically means earning interest on top of interest. You can set up an automatic savings system like we described above, and if you choose an investment account to put your savings into the interest can compound and your savings will grow significantly over the next few years.
How significantly, you might ask? Plug some sample numbers into this compound interest calculator and you’ll see for yourself how magical a savings tool it can be.
There are a variety of investment accounts you can choose from, including GICs (guaranteed investment certificates), mutual funds, and ETFs (exchange-traded funds). Talk with your bank to figure out which type of account works best for your financial goals and preferred risk level.
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