What is Climate Action Incentive?
CAI is a type of tax credit that you can claim on your income taxes. It was first introduced to residents of Manitoba in 2018. New Brunswick also joined the program but only for that year. Alberta, Ontario and Saskatchewan followed suit in 2019.
All of these provinces have a carbon tax known as the “fuel charge”, which residents must pay when buying gasoline at a pump or heating their homes.
The Climate action incentive (CAI) is a refundable credit which consists of a basic amount and a supplement for residents of small and rural communities. If you’re a resident of Ontario, Manitoba, Alberta, and Saskatchewan you can apply for the CAI rebate on your 2021 tax return. Your CAI rebate amount will depend on:
- the province you live in
- your marital status and
- the number of children in your family
Climate Action Incentive (CAI) payments are designed to return the proceeds from the fuel charge to residents of the provinces who use the federal system of carbon pollution pricing.
What has changed in 2022?
New! Quarterly Payments for the Climate Action Incentive
As announced on December 3, 2021, the Climate Action Incentive (CAI) will be delivered quarterly, starting in July 2022. The CAI will no longer be paid as a refundable credit on the T1 return.
- CAI payments will be delivered at the beginning of each quarter. To give the Canada Revenue Agency (CRA) sufficient time to develop the new system, payments will start in July 2022 with a “double-up” payment. This payment would return proceeds from the first two quarters of the 2022-23 fuel charge year (April 2022 to March 2023).
- The CRA will determine the actual payments for each quarter based on the information they have on file at the time.
- You can expect to receive them on the 15th of April, July, October and January.
- Once your 2021 Income Tax and Benefit return is processed and if you are entitled, the first payment will be issued on July 15, 2022 and will include a retroactive amount for April 2022.
Prior to 2022?
To apply for and claim Climate Active Incentive payments, all you have to do is:
- Fill out your income tax and benefit return
- Complete Schedule 14, which is part of your tax return
- File your tax return with the Canada Revenue Agency (CRA)
If applicable, the CRA will automatically add your Climate Action Incentive payment to your annual balance owing. Otherwise, the payment will raise your yearly tax refund. Check your tax package or certified tax software to find the forms you’re looking for. Once you receive it, you can see the CAI payment amount in the “Provincial” section of your tax return, on the Detailed Tax Summary page (line 45110 of your T1 slip).
To learn more enroll in our Income Tax T1 course