The Canadian government is dedicated to taking meaningful action against climate change, and part of its strategy involves the application of a price on pollution in jurisdictions that do not have their own pollution pricing systems meeting the federal benchmark.
In this comprehensive guide, we will explore the key details of the Climate Action Incentive Payment program for 2023-24, providing valuable insights and information to ensure that Canadian households can maximize their benefits.
Federal Fuel Charge and Its Application
The federal government’s approach to tackling climate change involves the implementation of a federal fuel charge in specific provinces. In 2023-24, this charge will continue to apply in Alberta, Saskatchewan, Manitoba, and Ontario.
Furthermore, starting from July 1, 2023, the federal fuel charge will come into effect in Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. This charge is a pivotal step in reducing carbon emissions, and its revenue is used for important initiatives.
Direct Proceeds and Their Redistribution
It’s important to note that the Government of Canada does not retain any direct proceeds from pollution pricing. Instead, all direct proceeds collected from the federal fuel charge are returned to the province or territory of origin. The distribution varies based on the province’s specific circumstances.
For those provinces that have voluntarily adopted the federal pollution pricing system, the direct proceeds are returned to the respective provincial governments.
However, for provinces that do not meet the federal stringency requirements in 2023-24, such as Alberta, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan, 90 percent of the direct proceeds from the federal fuel charge will be allocated to the residents of those provinces through the Climate Action Incentive (CAIP) payment.
The remaining 10 percent will be utilized to support small businesses and Indigenous groups.
For the agricultural sector, proceeds related to the use of natural gas and propane by farmers are directly returned to the farmers through a refundable tax credit.
Additionally, fishers and farmers are exempt from paying the federal fuel charge on gasoline and light fuel oil used for eligible fishing and farming activities in provinces under the federal program.
What is Climate Action Incentive Payment?
The government initiated the Climate Action Incentive (CAIP) payments, a program that aims to return fuel charge proceeds to households. These payments are made on a quarterly basis, starting from July 2022.
The primary goal is to ensure that Canadian households receive more money back than they pay, contributing to a fair and equitable approach to pollution pricing.
To receive their CAI payment, Canadians need to file their annual tax return. If they qualify for the 10 percent supplementary amount for residents of small and rural communities, they must indicate this on their tax return.
It’s important to note that in Prince Edward Island, all residents receive the rural supplement amount without needing to specify it on their tax return. The government is actively considering the possibility of increasing the rural supplement for future years.
Canada CAIP Schedule for 2023-2024
In the 2023-24 fiscal year, the CAI payments will be disbursed as follows:
- Residents of Alberta, Manitoba, Ontario, and Saskatchewan will receive four equal quarterly payments on 15 April 2023, 15 July 2023, 15 October 2023, and 15 January 2024. These provinces are already covered by the federal price on pollution.
- For residents of Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, where the federal fuel charge comes into effect on July 1, 2023, they will receive three equal quarterly payments on 15 July 2023, 15 October 2023, and 15 January 2024 for the 2023-24 fiscal year. They will receive four payments in the subsequent year.
CAI Payment Amounts
The CAI payment amounts for 2023-24 vary depending on the province and the number of household members. Here’s a breakdown of the quarterly and annual payment amounts:
Quarterly Climate Action Incentive Payment Amounts 2023-2024:
|Province||First Adult||Second Adult||Each Child||Family of 4|
|Climate Action Incentive Payment Alberta||$193||$96.50||$48.25||$386|
|Climate Action Incentive Payment Manitoba||$132||$66||$33||$264|
|Climate Action Incentive Payment Ontario||$122||$61||$30.50||$244|
|Climate Action Incentive Payment Saskatchewan||$170||$85||$42.50||$340|
|Climate Action Incentive Payment Newfoundland||$164||$82||$41||$328|
|Climate Action Incentive Payment Nova Scotia||$124||$62||$31||$248|
|Climate Action Incentive Payment Prince Edward Island||$120||$60||$30||$240|
Annual Climate Action Incentive Payments 2023-2024:
|Province||First Adult||Second Adult||Each Child||Family of 4|
|Climate Action Incentive Payment Alberta||$772||$386||$193||$1,544|
|Climate Action Incentive Payment Manitoba||$528||$264||$132||$1,056|
|Climate Action Incentive Payment Ontario||$488||$244||$122||$976|
|Climate Action Incentive Payment Saskatchewan||$680||$340||$170||$1,360|
|Climate Action Incentive Payment Newfoundland||$656||$328||$164||$1,312|
|Climate Action Incentive Payment Nova Scotia||$496||$248||$124||$992|
|Climate Action Incentive Payment Prince Edward Island||$480||$240||$120||$960|
It’s important to highlight that residents of Newfoundland and Labrador, Nova Scotia, and Prince Edward Island are not eligible for an April 2023 payment due to the delayed implementation of the federal fuel charge in these provinces.
You may also like:
- Climate Action Incentive Payment Dates for 2023 & 2024, Maximizing Your Benefits
- GST Payment Dates 2024
- BC Climate Action Tax Credit Payment Dates 2023 & 2024
- Carbon Tax Rebate Manitoba 2023-2024
- 7 Ways to Invest for Retirement
Fair Redistribution of CAI Payments
In an effort to ensure fair redistribution, climate action incentive (CAI) payment amounts have been adjusted in Alberta, Manitoba, Ontario, and Saskatchewan to address over- and under-distributions of proceeds from previous years.
This aligns with the government’s commitment to address any discrepancies between the proceeds originating in a province and the amount returned to that province.
Further details on this reconciliation process can be found in the forthcoming Greenhouse Gas Pollution Pricing Act Annual Report for 2021.
In conclusion, the Climate Action Incentive Payment program is a vital component of Canada’s efforts to combat climate change while supporting Canadian households.
This comprehensive guide provides the information needed to maximize the benefits of this program and to ensure that Canadian households receive more money back than they pay, fostering a greener and more sustainable future.