What is the climate action incentive payment (CAIP)? Here’s how it affects your taxes.

For years now, residents of Alberta, Ontario, Manitoba and Saskatchewan have received a refundable tax credit on their taxes as part of the Climate Action Incentive Payment (CAIP) – and starting in July 2023, these payments have been extended to residents of Nova Scotia, Prince Edward Island and Newfoundland & Labrador.

The payments are given to residents who experience the federal fuel charge, popularly referred to as the “carbon tax,” as part of the Government of Canada’s climate change plan and efforts to protect the environment while making the shift to more affordable, sustainable actions.

How does the fuel charge work?

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 green solutions – which benefits us all as it protects the environment and helps grow the economy. The goal of the CAIP is to offset the cost of the fuel charge and put some money back in your pocket.

Is the climate action incentive payment (CAIP) the same as the climate action incentive (CAI) rebate?

The climate action incentive (CAI) rebate is now the climate action incentive payment (CAIP).

The CAIP can’t be claimed as a lump sum refundable tax credit as of tax year 2021. Instead, you’ll receive tax-free payments in April, July, October, and January. For the Atlantic provinces, the first payment in 2023 will come in July and will include the CAIP amount you’re owed from April 2023. Your following payments will come in October and then January 2024. From 2024 and onward, the CAIP will be paid in 4 installments.

How do I get the CAIP?

If you’re a resident of Ontario, Manitoba, Alberta, Saskatchewan, Nova Scotia, PEI and Newfoundland & Labrador, you’ll receive the CAIP automatically as long as you file a tax return, with the Atlantic provinces getting their first payment in July 2023.

The only additional step required would be for those who live in small or rural communities to check the box on page 2 of the T1 to indicate that they are eligible for the additional 10% supplement. 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. This supplement is relevant everywhere except for Prince Edward Island, where all residents automatically receive the 10% supplement for small and rural communities.

I don’t live in one of the listed provinces. 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 CAIP. 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 CAIP amount will depend on the province you live in, your marital status, and the number of children in your family. Because your eligibility depends on your family situation at the beginning of the month you receive a payment (April, July, October or January) instead of 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, Nova Scotia, PEI or Newfoundland & Labrador) to an ineligible province
• Your dependant (who is younger than 19) no longer lives with you
  
  

The average family of four will receive an incentive of $1,101 in Saskatchewan, $832 in Manitoba, $745 in Ontario, $1079 in Alberta, $1,312 in Newfoundland & Labrador, $992 in Nova Scotia and $960 in PEI.

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

Ontario
	2019	2020	2021 (paid in 2022)
First Adult	$224	$300	$373
Spouse	$112	$150	$186
Child	$56	$75	$93
Family of 4	$448	$600	$745
Manitoba
	2019	2020	2021 (paid in 2022)
First Adult	$243	$360	$416
Spouse	$121	$180	$208
Child	$61	$90	$104
Family of 4	$486	$720	$832
Saskatchewan
	2019	2020	2021 (paid in 2022)
First Adult	$405	$500	$550
Spouse	$202	$250	$275
Child	$101	$125	$138
Family of 4	$809	$1000	$1101
Alberta
	2019	2020	2021 (paid in 2022)
First Adult	$444	$490	$539
Spouse	$222	$245	$270
Child	$111	$123	$135
Family of 4	$888	$981	$1079

Nova Scotia
First Adult	$124
Spouse	$62
Child	$31
Family of 4	$248

Newfoundland & Labrador
First Adult	$164
Spouse	$82
Child	$41
Family of 4	$328

Prince Edward Island
First Adult	$120
Spouse	$60
Child	$30
Family of 4	$240

If you have any questions about the climate action incentive payments (CAIP), H&R Block Tax Experts are here to help. Find an office near you to book an appointment today.