Climate Action Incentives in Canada

About the CAIP

This program provides a refundable tax credit to residents of certain provinces in Canada. It is part of a new proposed affordability measure. The Canada Revenue Agency (CRA) provides these payments to those who are affected by the federal fuel charge, also known as the provincial carbon tax. This is why only certain provinces receive the credit. In these provinces the federal pollution pricing system applies. The government understands that the cost of living is expensive and these quarterly payments will often cover more than what the resident has paid. This is especially true for low to middle income families.

The reason that only some provinces have a pollution pricing system, is that provinces can choose to either create their own pollution pricing system or they can choose to use the federal system. The provinces that use the federal system are eligible for this credit. The other provinces either have their own provincial carbon tax or they are in the process of creating a pollution pricing system that meets the standards required by the federal government.

How it works

The idea behind these pricing systems was to fight climate change by reducing carbon pollution. The tax was there to make prices higher deterring Canadians from spending so much on fuel. Instead of charging residents a bill, the amounts are added to heating bills as well as fuel surcharges. The intention of the CAIP was to combat some of these costs for Canadians to give them some money in their pockets.

Who is eligible?

As of right now, the provinces that receive the CAIP are Alberta, Ontario, Manitoba and Saskatchewan. They have been getting these payments for a few years now. That being said, as of July 2023, the credit will also be given to residents of Nova Scotia, Prince Edward Island, and Newfoundland and Labrador.

In order to be eligible for the payment in these provinces, you must have lived in the province the first day of the month that the payments will be received, as well as the last day of the previous month. You must also meet one of the following conditions:

• Be 19 years old
• Have (or had) a spouse or common law partner
• You are (or were) a parent and live (or lived) with your child

In order to have an eligible child, they must meet the following conditions:

• They are under the age of 19
• They live with you
• You are primarily responsible for their care
• The child is registered for the Canada Child Benefit (one of the Child and Family Benefits)

CAIP in 2023 vs Previous Years

If you are someone who receives Climate Action Incentive Payments, then you have probably noticed that the process has changed. In previous years the CAIP was a tax credit and was referred to as the Climate Action Incentive Credit (CAIC). This amount was calculated when you filed your taxes and the credit was added to your annual tax return payments.

Now, as of July 2022, the incentive is known as CAIP and it is received as a quarterly benefit. You do not need to apply for it but your eligibility will be determined after you have filed your tax return. If you are eligible then you will receive the payments. That being said, if you have a spouse or common-law partner, only one person will get the payment. This will be decided by whoever’s tax return is assessed first. No matter which person receives it, the amount will be the same.

While you do not need to apply, you do need to complete your tax return every year to keep receiving payments. If you live in small or rural communities and qualify for the rural supplement, you do need to apply for it. There is a form you will need to fill out and attach to your tax return. This will be evaluated and you will start receiving that benefit as well if you are eligible. Just like the original CAIP, if you are common law or have a spouse only one will receive the credit. It will come at the same time as the CAIP.

How Much You Receive with the CAIP

When it comes to how much you get with the CAIP, it ultimately depends on the province that you live in. The amounts you receive are also based on the tax year before you receive the payments. In the case of 2022 payments, they were based on your 2021 tax return, and it will be same for any 2023 amounts but with your 2022 tax return. That being said, the benefit is universal and will not be reduced based on your adjusted net family income. The rural supplement is 10% of the base amounts that are listed below.

Ontario CAIP Payments

If you live in Ontario, the annual credit amounts are $488 for an individual, $244 for a spouse or common law partner, $122 per child 18 and under, and $244 for the first child in a single parent family.

Manitoba CAIP Payments

If you live in Manitoba, the annual credit amounts are $528 for an individual, $264 for a spouse or common law partner, $132 per child 18 and under, and $264 for the first child in a single parent family.

Alberta CAIP Payments

If you live in Alberta, the annual credit amounts are $772 for an individual, $386 for a spouse or common law partner, $193 per child 18 and under, and $386 for the first child in a single parent family.

Saskatchewan CAIP Payments

If you live in Saskatchewan, the annual credit amounts are $680 for an individual, $340 for a spouse or common law partner, $170 per child 18 and under, and $340 for the first child in a single parent family.

Nova Scotia CAIP Payments

If you live in Nova Scotia, the annual credit amounts are $496 for an individual, $248 for a spouse or common law partner, $124 per child 18 and under, and $992 for a family of 4.

Newfoundland and Labrador CAIP Payments

If you live in Newfoundland and Labrador, the annual credit amounts are $656 for an individual, $328 for a spouse or common law partner, $164 per child 18 and under, and $1,312 for a family of 4.

Prince Edward Island CAIP Payments

If you live in Prince Edward Island, the annual credit amounts are $480 for an individual, $240 for a spouse or common law partner, $120 per child 18 and under, and $960 for a family of 4.

CAIP Payment Dates

If you have filed your tax returns and are eligible for the CAIP, you should receive your payments on the 15 of April, July, October and December. The first payments for 2022 were issued on July 15, 2022 and a retroactive payment for April was issued at the same time.

How you receive your CAIP payment depends on how you receive your tax return. Those who get their yearly tax return directly deposited into their bank account, will receive the CAIP the same way, along with any other government benefits that you qualify for.

If you owe any money to the federal government for taxes or have any other debt with them, this amount will be used to pay off that debt. You will then start receiving it again once the debt has been paid in full.

Overview

The CAIP is the federal government’s way of reimbursing residents of provinces directly affected by the pollution pricing system. These provinces are currently Ontario, Alberta, Manitoba and Saskatchewan. These payments will be expanded in July of 2023 to other provinces. In order to verify that you receive these benefits, you need to be sure that your yearly tax return is completed. Just like other government benefits, these payments will cease until your taxes are up to date. The amounts you receive for the CAIP are based on the province that you live in and not your yearly income. Since these quarterly payments are still new, people are still getting used to them but they will arrive on the 15th of the month when they are dispersed. Even if you don’t live in the provinces available to receive the CAIP, there are plenty of other government benefits that are helping Canadians get through this period of high inflation.