Everything you need to know about the Climate Action Incentive Supplement for small and rural communities.

January 19, 2024

For years now, residents of Alberta, Ontario, Manitoba and Saskatchewan have received a quarterly payment tax credit on their taxes as part of the Climate Action Incentive Payment (CAIP), and then more recently the east coast provinces of Nova Scotia, PEI, and Newfoundland & Labrador. For those who live in areas deemed rural by the government, they received an additional 10% over their urban contemporaries. But those in rural communities can get even more excited this year, as the amount will double from 10% to 20%.

That’s not the only thing those living in rural communities can expect. A temporary, three-year suspension of the carbon tax on deliveries of heating oil in all provinces where it is in effect was announced.

So, what does this mean for you? We’ve broken it all down below.

Firstly, what is the Climate Action Incentive Payment?

The Climate Action Incentive Payments (CAIP) are quarterly refundable payments given to residents in provinces with the federal fuel charge, a carbon tax that was initiated as part of the Government of Canada’s climate change plan in an effort to protect the environment while making the shift to more affordable, sustainable actions.

How do I get the Climate Action Incentive Payment?

If you’re a resident of Ontario, Manitoba, Alberta, Saskatchewan, New Brunswick, Nova Scotia, PEI, and Newfoundland & Labrador, you’ll receive the CAIP automatically and quarterly, as long as your income tax returns are up to date.

You’re eligible if:

  • You’re a resident of Canada for income tax purposes.
  • You’re a resident of a participating province.
  • You’re at least 19 years old in the month the payment goes out.

If you live in a small or rural community, the tax form T1 has a box on page 2 that when checked will indicate eligibility for the additional rural supplement. People who live in rural areas will get the supplement to account for the fact that they likely use more energy, and don’t have as many public transportation options to reduce their fuel consumption as those in cities. This supplement is relevant everywhere except for Prince Edward Island, where all residents automatically receive the 10% supplement for small and rural communities.

When will I receive the supplement?

The increase will be reflected in the April 2024 payment which is the first payment based on your 2023 income tax return. You must file your tax return in order to receive this payment.

How much can I expect to get back when I file?

Your CAIP amount will depend on the province you live in, your marital status, and the number of children in your household.

There are different payment amounts per province but also per household status, so singles receive the lowest amount, a couple (common law or married) receive more, a family with a child or children receives an additional amount for each child. For people who are sharing custody of a child, the person who is considered the child’s primary parent receives the full CAIP allotment, but if the parents split custody 50/50 in the eyes of the government, they can also split the amount 50/50.

Below are the annual Climate Action Incentive Payment amounts for 2023-2024:

AlbertaManitobaOntarioSaskatchewanNewfoundland & LabradorNova ScotiaPEI
First Adult$772$528$488$680$656$496$480
Second Adult$386$264$244$340$328$248$240
Each Child$193$132$122$170$164$124$120
Family of 4$1,544$1,056$976$1,360$1,312$992$960

*Note that the payments for April 2024 to January 2025 (which will include the increased supplement to 20%) haven’t been announced yet.

Because your eligibility depends on your family situation at the beginning of the month you receive a payment (April, July, October and January), rather than at the end of the tax year (December 31), you’ll need to let the CRA know if your situation changes. This includes any of the following situations:

  • You and your spouse or common-law partner separate.
  • You move from an eligible province (Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, PEI, or Newfoundland & Labrador) to an ineligible province.
  • Your dependant (who is younger than 19) no longer lives with you.

What about home heating?

Normally, in those eligible provinces, there is an additional tax charged when you purchase a carbon fuel, like home heating oil or gas for your car. It’s a nominal amount added at the pump or to your bill. You get some of that money back in the CAIP. However, for the next 3 years, the government isn’t going to charge that tax on home heating oil – a reprieve for many Canadians, but especially those who live in Atlantic Canada where around a third of Canadians still use furnace oil to heat their homes.

If you have any questions about how the Climate Action Incentive Supplement affects your taxes, our experts are here to help. Choose from one of four convenient ways to file: File in an Office, Drop-off at an Office, Remote Tax Expert, or do it yourself with our Tax Software.

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