What is the Climate Action Incentive? Here’s how it affects your taxes.

January 28, 2021

What is the Climate Action Incentive? Here’s how it affects your taxes.

As part of the Government of Canada’s climate change plan, residents of Alberta, Ontario, Manitoba and Saskatchewan can receive a tax credit called the Climate Action Incentive (CAI) – an effort to protect the environment while making the shift to sustainable actions more affordable.

These provinces have a federal carbon tax – it’s called a “fuel charge.” Rather than being sent to you as a separate bill, the fuel charge is added directly to the cost of your gas when you fill up at the pumps and to your home heating bills. The fuel charge gives us the incentive to make cleaner choices and encourages businesses to find clean solutions – which benefits us all as it protects the environment and helps grow the economy. The goal of the CAI is to offset the cost of the fuel charge and put some money back in your pocket.

How do I get the Climate Action Incentive?

If you’re a resident of Ontario, Manitoba, Alberta, or Saskatchewan you can apply for the CAI rebate on your 2020 tax return. You’re only allowed one credit per household, so you’ll have to decide which member of your family will apply for the credit (you’ll receive the same rebate no matter who applies). The amount you’re entitled to will be added directly to your tax refund.

I don’t live in Manitoba, Ontario, Saskatchewan or Alberta; why don’t I get this tax credit?

Residents of other provinces won’t be charged the fuel charge and so they won’t be eligible for the CAI. This is because they either already have a provincial carbon tax or their provincial governments are working on a carbon pollution pricing system that meets the federal standard.

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

Your CAI rebate amount will depend on the province you live in, your marital status, and the number of children in your family. Unlike other tax credits, it won’t be based on income – every household has the same rebate available.

The average family of four will receive an incentive of $1000 in Saskatchewan, $720 in Manitoba, $600 in Ontario, and $981 in Alberta. People who live in rural areas will get 10% more than those in cities to account for the fact that they likely use more energy and they don’t have as many public transportation options to reduce their fuel consumption.

Here’s a provincial breakdown based on household size and tax year:

Ontario

201820192020
First Adult$154$224$300
Spouse$77$112$150
Child$38$56$75
Family of 4$307$448$600

Manitoba

201820192020
First Adult$170$243$360
Spouse$85$121$180
Child$42$61$90
Family of 4$339$486

$720

Saskatchewan

201820192020
First Adult$305$405$500
Spouse$152$202$250
Child$76$101$125
Family of 4$609$809$1000

Alberta

201820192020
First AdultN/A$444$490
SpouseN/A$222$245
ChildN/A$111$123
Family of 4N/A$888$981

After I pay the fuel charge and get the Climate Action Incentive rebate, how much money am I left with?

The government estimates that most families will continue to get more money back than they pay. According to the Department of Finance Canada, here’s what the average household might be left with after paying the fuel charge and getting the CAI rebate:

Ontario$153
Manitoba$243
Saskatchewan$249

Alberta

$355


If you have any questions about the Climate Action Incentive payments, H&R Block Tax Experts are here to help. Find an office near you to book an appointment today, or chat with a Tax Expert by booking an Expert Review for your return.

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