Your Carbon Tax Rebate & CAI Deposit Explained by Province
Your carbon tax rebate, officially called Climate Action Incentive (CAI) payments, will all depend on where you live in Canada, plus the size of your household.
Below, select your province to learn more about how this federal rebate impacts you. At the end, we discuss how the carbon tax works in Canada, what exactly the Climate Action Incentive (CAI) payment is (including who gets the CAI carbon tax rebate, and when CAI carbon tax rebate payments arrive), and finally, how much is the carbon tax?
Carbon tax by province or territory
Jump to your province.
British Columbia
The carbon tax has not been controversial in BC because the province instituted its own tax way back in 2008. BC, a leader in fighting pollution through taxation, now charges $50 per tonne on fossil fuels, including gasoline, natural gas, and diesel. At the gas pump, this translates to around 11 cents extra per litre; similar to the federal levy.
A BC climate action tax credit (BCCATC) is available to residents through an income-based system that equates to about $174 per adult and $51 per child. It will go up to $193.50 and $56.50 respectively on July 1, 2022. However, this rebate only qualifies if you meet the income threshold.
Alberta
Alberta has made it abundantly clear it is no fan of the federal carbon tax. The prairie province was added to the federal carbon tax list in January 2020 despite its attempt to challenge the federal law. Alberta challenged the tax all the way to the Supreme Court of Canada, but lost its bid as the tax was ruled entirely constitutional.
The province currently charges $50 per tonne on emissions, which equals an annual rebate of $1,079 for a family of four. That’s $539 for a single adult, $270 for the second adult, and $135 per child. For a single parent, the first child qualifies for $270.
Saskatchewan
Alberta’s neighbours have been a strong ally in opposition to the carbon tax. Both provinces feature strong oil and gas industries that see the carbon tax as a threat. Saskatchewan, like Alberta, fought the carbon tax all the way to the Supreme Court.
In the meantime, the federal carbon tax is applied to all emitters that do not meet federal standards. In Saskatchewan, the carbon tax is $50 per tonne and rebates top out at $1,101 for families of four, while a single individual can expect $550. For a single parent, the first child qualifies for $275.
Manitoba
Like Saskatchewan and Alberta, Manitoba strongly opposed the federal carbon tax but had it forced on them by Ottawa. That didn’t sit well with Manitoba, which recently lost a two-year court battle against the federal plan.
The province attempted a Made-in-Manitoba Climate and Green Plan at $25 per tonne on emissions, but it did not meet Ottawa’s standard, so the federal system was implemented.
For rebates, Manitoba families of four should receive $832 in carbon tax rebates this year. That’s $416 for the first adult, $208 for the spouse and $104 per child. For a single parent, the first child qualifies for $208.
Ontario
Not to sound like a broken record, but Ontario is another province firmly in opposition of the federal carbon tax, and like Manitoba, insists it can do better with a provincial structure. Ottawa reluctantly approved Ontario’s carbon tax plan recently despite higher pollution thresholds for emitters under the federal system.
With the federal tax increasing the price of gas by 11 cents per litre, the Ontario government has proposed cutting the provincial gas tax to shave off 5.7 cents per litre. The move might make for a nice headline, but isn’t likely to significantly impact household budgets.
The carbon tax rebates in Ontario are $745 for a family of four. That works out to $373 for a single adult or first adult in a couple, with the second adult getting $186. Each child is entitled to $93. For a single parent, the first child qualifies for $186.
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Quebec
The only other province besides BC to have its own provincial carbon tax in place, before the federal government initiated theirs in 2018, is Quebec.
Quebec has a cap-and-trade system, setting caps on emissions by industry. Companies that cannot reduce their emissions below that cap must buy credits from a carbon market shared with California. While Quebec mostly targets energy producers with its system, drivers in the Montreal area cough up a tax of three cents per litre on gas.
The minimum price per tonne for credits varies in the province, but it averages around $17 per tonne. All revenues go towards various measures to reduce carbon emissions and fight climate change. Unfortunately for those looking for a federal rebate—no luck, since Quebec does not participate in the federal plan.
What is the cap-and-trade program?
The everyday user of greenhouse gas-emitting vehicles shouldn’t be too concerned about a cap-and-trade system because it mostly targets big polluters in industries like oil & gas. Under cap-and-trade, a regulatory body like the provincial or federal government sets a “cap” on emissions output, setting a limit to how much industry sectors are allowed to pollute each year. The government body will issue permits, allowances if you will, for industries to pollute and these can be “traded” or sold to other companies who need to emit more.
For example, a company that emits 10 tons below its cap can trade its extra 10 allowances in the market or bank them for future use. As part of the carbon tax, the federal government is calling this an output-based pricing system where compliance obligations can be met by paying carbon pollutions price ($20/t currently) or purchasing credits from industrial facilities that beat their standard.
New Brunswick
Like Ontario, New Brunswick has designed a system to allow for higher pollution thresholds while maintaining Ottawa’s mandatory price per tonne standards. Provinces like Ontario and New Brunswick argue that taking advantage of these “loopholes” in the federal plan is meant to protect industries and jobs.
New Brunswick raised its carbon tax to $50 per tonne in accordance with federal standards, and the revenue will be “recycled” back into the provincial economy rather than doled out in rebates. Local drivers can expect to pay an extra 11 cents per litre at the pump, much like other provinces.
P.E.I.
After backing out of the supreme court challenge of the carbon tax, Prince Edward Island decided to administer its own carbon levy on most liquid and gaseous fuels. It does not, however, tax furnace oil and propane.
The province recently tabled legislation that will deliver $140 rebates to P.E.I. residents in July 2022. That will be only for those with incomes under $50,000. Most revenue from Prince Edward Island’s carbon levy goes towards provincial initiatives, and to offset the reduction in provincial gas taxes used as a way to shield against the federal levy’s impact.
Newfoundland & Labrador
Newfoundland adopted a similar approach to P.E.I., reducing its gas tax to offset any pain at the pumps. The province will raise its price to $50 per tonne later in 2022.
Nova Scotia
Nova Scotia has a similar cap and trade system as Quebec. This system, implemented in January 2019, meets the federal standards in limiting greenhouse gas emissions. It, therefore, does not participate in the federal carbon tax rebate program.
Northwest Territories, Yukon & Nunavut
Having implemented its territorial carbon tax in 2019, Northwest Territories will charge around 11.7 cents per litre of gas this year for drivers. The offsets and rebates, however, are quite generous with a 100% rebate on home heating fuel, and a cost-of-living offset of up to $104 per adult and $120 per child.
Yukon and Nunavut signed on to the federal carbon tax plan, with Yukon collecting revenue and distributing the rebates. Rebates are in the range of $80 per individual and a little more if you live outside of Whitehorse. Nunavut covers half the carbon levy, reducing its gas price increase by half. It does not offer rebates.
How does carbon tax work In Canada?
Source: Carbon pricing is now in effect across Canada. What is it anyway? (Globe & Mail)
In the summer of 2018, Prime Minister Justin Trudeau’s government passed the Greenhouse Gas Pollution Pricing Act, dubbed the carbon tax, as part of a 2015 campaign pledge to put a price on pollution. The bill gave his government the authority to implement a carbon pricing system for provinces that do not have an adequate carbon pricing model of their own. The tax started at $20 per ton in 2019 and rose $10 per ton each year until reaching $50 per ton in 2022.
The goal, in part, is for Canada to meet its obligation to the Paris Agreement. That means cutting Canada’s carbon pollution by 40% below 2005 levels by 2030.
In December 2020, Trudeau announced a gradual hike in the federal carbon tax on fuels to $170 a tonne by 2030. He also announced a $15 billion investment over the next decade that will go towards building up Canada's electric vehicle charging infrastructure, buying incentives for zero-emission vehicles, and home retrofits.
The government of Canada calls the tax “revenue neutral” because all direct proceeds of the program go directly back to residents in the provinces where the federal system was forcefully adopted.
What is the Climate Action Incentive (CAI) payment?
For the provincial governments that refused to adopt the carbon tax, Trudeau wasn’t about to reward them with billions in new tax revenue. That’s why the feds created the Climate Action Incentive (CAI) – to make sure taxpayers are on the receiving end of the carbon tax revenue – not uncooperative premiers. It also softens the blow for those cringing at increased power bills and pump prices.
Who gets the CAI carbon tax rebate?
Residents of Ontario, Manitoba, Saskatchewan and Alberta are currently eligible for the federal rebate. The rebate payments will increase over time and vary between provinces and household size. The baseline amount for a family of four living in Ontario, for example, is $745 (claimed through income tax returns). You don't need to apply for the CAI payment; just make sure to file your tax return and the Canada Revenue Agency (CRA) will determine your entitlements.
If you are a resident of a rural or small community, you could also be eligible for an additional 10% supplement of the base amount.
There will also be an allocation of the federal tax revenue directed to universities, schools, municipalities, nonprofits and Indigenous communities, as well as small and medium-sized businesses.
When will I get the CAI carbon tax rebate payment?
Are you wondering about carbon tax rebate cheque dates? Before 2022 the CAI credit could be claimed on your income tax return and was automatically applied to your balance owing for the year or added to any refund you are entitled to. However starting in mid-2022 this CAI credit has become a quarterly CAI payment (CAIP) deposited on the 15th of April, July, October, and January. The deposit may show up in your online account and bank statement labelled as "Federal Payment", "EFT Credit Canada", or "Canada Fed".
How much is the carbon tax?
We hear a lot about how the carbon tax is designed to go after the big polluters in various industries, but if you’re driving a conventional fuel-burning car, or heat your home using natural gas, for example, you will be paying extra too.
Under the carbon tax levy, filling up your gas tank costs 11 cents extra per litre; something to consider if you’re weighing up the costs of switching to an energy-efficient electric vehicle.
Those who heat large homes and drive frequently will be paying more under the plan. The government estimates an average yearly cost of $564 in 2022 for a household in Ontario, for example. However, with an average rebate of $697 most will end the year in the green.
In Saskatchewan, where the temperatures are cold and the roads long, the yearly estimated cost would be higher at $946 per household. But rebates can be well over $1,000 depending on the size of your family. The average cost impact per household of the federal system can be found here.
