All about Climate Action Incentive Payments

If you are new in Canada and are still figuring out about Climate Action Incentive Payments, then this article will be really useful for you. Keep reading to know more about this program – what is it, what are the advantages, how does it work, and how can you claim money using it.
 

Understanding Climate Action Incentive Payments program

“Climate Action Incentive Payment” is a program incorporated into the Canadian Federal Government’s initiatives that are committed to fighting climate change. It is linked to the federal carbon pricing initiative that seeks to limit the emission of greenhouses gases.

People in certain provinces where the federal carbon pricing scheme works are granted direct payments that serve as an equivalent monetary compensation for the tax charges. These are the provincial governments involved in the Federal’s carbon pricing program, namely, Ontario, New Brunswick, Manitoba, and Saskatchewan.

It is meant to compensate for the additional expenses incurred by individuals under this system of carbon levies. The payment amount varies depending on the number of families and place within the selected provinces. It is the aim to motivate people and households to go for green options and minimize one’s GHG emissions. Commencing July 2022, the Canadian government has shifted the remuneration approach for the Climate Action Incentive (CAI) from a yearly reimbursable credit asserted on individual income tax filings to periodic tax-exempt disbursements facilitated via the benefit system.

Eligibility for Climate Action Incentive Payment  

A nationwide program called The Climate Action Incentive (CAPI) has rendered provinces of their distinct carbon pricing system ineligible for participation. However, noteworthy is that provinces like Quebec and BC having specialized programs on cancer control are not within CAIP system. Instead, a territorial rebate is considered to residents living in the Northwest Territories, Nunavut, or Yukon while the CAIP is used for others.

Currently, CAIP applies to only eight provinces out of ten namely; Alberta, Manitoba, Ontario, Saskatchewan. It has been active from the beginning and other seven provinces that constitute Canada are yet to adopt the idea. This program is famously known in Alberta as ‘Carbon Tax Rebate’, and recently, since first July 2023, Maritime provinces have also become part of the CAIP.

To be eligible for the Climate Action Incentive Payment (CAIP) in Canada, you must meet the following criteria:

1. Residency Requirement

Be classified as a resident of Canada for income tax purposes.

2. Province Participation

Reside in a province that is actively participating in the CAIP program.

3. Age and Relationship Criteria

Fulfill at least one of the following conditions –

• Attain a minimum age of 19 in the month when the payment is issued.
• Currently have or have had a spouse or common-law partner.
• Be a parent to at least one child living with you or having lived with you.

4. Primary Parent Status for Child Allocation

If you are a parent with a child living with you, you must be their primary parent to receive the full CAIP allocation.

The child must also be registered under the Canada Child Benefit plan (CCB).

5. Partial Payment for Shared Custody

Parents without full custody of their child can receive 50% of the CAIP amount they would receive if the child lived with them full-time.

6. Quarterly Distribution and Timing

Payments are distributed quarterly, and eligibility is determined at the beginning of the payment month. For example, if you turn 19 in August 2023, you would receive the October 2023 payment but not the one in July 2023.

7. Spousal Arrangement

In cases where you have a spouse or common-law partner, only one of you will receive the CAIP on behalf of your entire family.

It's important to note that to receive a payment on behalf of your child, they must be registered for the Canada Child Benefit (CCB).

Climate Action Incentive Payment program benefits

CAIP has the potential to boost individual’s budget through economic support, yet it also seeks to reward positive emission-mitigating behaviors. Following are some of the main benefits of CAIP that you should be aware of –

• Offsetting Costs

The CAIP will be utilized to compensate for extra expenditures that people and their households may face due to the federal carbon price policy. It is an economic system that taxes carbon to reduce emissions and lower global temperatures.

• Direct Financial Support

Residents in provinces that fall under the federal carbon pricing system are eligible for direct financial assistance from the CAIP. The provinces are Ontario, New Brunswick, Manitoba, and Saskatchewan.

• Universal Nature

The CAIP is non-targeted which implies that it is an equal opportunity payment scheme. It is more inclusive since it benefits every eligible individual or family irrespective incomes level.

• Rural Supplement

An added payment known as a “rural supplement” may be available for people living in small or rural settings. It is referred to as the supplement, which is usually 10% more than the standard CAIP, and it takes into consideration the specific conditions where these people live.

• Encouraging Climate-Friendly Choices

In addition to giving money, CAIP tries to persuade people and their families to adopt green habits. It encourages companies to reduce carbon emission and adopt green technologies by imposing a cost on carbon.

Do I need to apply to get CAIP benefits?

There is no need for you to write another application so that you can receive the Climate Action Incentive Payment (CAIP). While reviewing your income tax and benefit return, the Canada Revenue Agency (CRA) will assess your eligibility and issue payment if deemed appropriate.

In situations involving an unmarried partner or cohabitant, only one of you is entitled to the family credit. This credit is allocated to the initial filer, either the spouse or the common-law partner. The credit remains consistent, regardless of who ultimately receives it. It is crucial to ensure that both you and your spouse or common-law partner, if applicable, file annual income tax and benefits returns to receive your Climate Action Incentive Payment (CAIP).

Some of these communities are located in small and rural CAIP areas, where the resident’s additional amounts could be provided, as well. To be eligible for the rural supplement, it is imperative that you respond to a specific inquiry on the second page of your income tax and benefit return.

How to apply for Climate Action Incentive Payment program?

It is really simple to start getting the benefits of the CAIP. Make sure you file your taxes on time and you’ll be able to get the benefits automatically without any hassle.

If you have recently arrived in Canada, and you are a newcomer, this guide provides instructions on how to apply for the Climate Action Incentive Payment (CAIP). Follow the steps outlined below to initiate the application process.

For Individuals with Children –

• Fill out and sign Form RC66, the Canada Child Benefits (CCB) application, encompassing all child and family benefits, inclusive of the GST/HST credit. Additionally, complete Form RC66SCH, providing details on your status in Canada and income information specifically for the Canada Child Benefits (CCB) application.

For Individuals without Children –

Complete and sign Form RC151, the application for GST/HST Credit and Climate Action Incentive Payment designed for individuals who recently became residents of Canada. Afterward, send the duly filled form to your assigned tax center via mail.

If you are a resident of a small or rural community, you may qualify for an extra payment known as the rural supplement. To be eligible, ensure to check the relevant box on the second page of your income tax and benefit return. It's important to note that the 15th of April, July, October, and January are the standard payment dates, but if any of these dates fall on a Saturday, Sunday, or a federal statutory holiday, the payment will be processed on the last business day before the 15th.

How much payment will you get?

The amount you receive as payment depends on your family situation and the province where you reside. The Climate Action Incentive Payment (CAIP) is uniform, meaning it is not subject to a reduction based on adjusted family net income.

Ontario program provides an annual credit of –

• $488 for an individual
• $244 for a spouse or common-law partner
• $122 per child under 19
• $244 for the first child in a single-parent family

Manitoba program provides an annual credit of –

• $528 for an individual
• $264 for a spouse or common-law partner
• $132 per child under 19
• $264 for the first child in a single-parent family

Saskatchewan program provides an annual credit of –

• $680 for an individual
• $340 for a spouse or common-law partner
• $170 per child under 19
• $340 for the first child in a single-parent family

Alberta program provides an annual credit of –

• $772 for an individual
• $386 for a spouse or common-law partner
• $193 per child under 19
• $386 for the first child in a single-parent family

The Climate Action Incentive Payment (CAIP) includes a rural supplement, amounting to 10 percent of the base payment, specifically intended for individuals residing in small and rural communities.

The Canada Revenue Agency (CRA) neither imposes interest charges on, nor provides interest for, any overpayments or underpayments related to the CAIP.

Starting from July 2023 the following programs offer quarterly credits.

Newfoundland and Labrador

• $164 for an individual
• $82 for a spouse or common-law partner
• $41 per child under 19
• $82 for the first child in a single-parent family

Nova Scotia

• $124 for an individual
• $62 for a spouse or common-law partner
• $31 per child under 19
• $62 for the first child in a single-parent family

Prince Edward Island

• $120 for an individual
• $60 for a spouse or common-law partner
• $30 per child under 19
• $60 for the first child in a single-parent family

New Brunswick

• $92 for an individual
• $46 for a spouse or common-law partner
• $23 per child under 19
• $46 for the first child in a single-parent family

When will you get the payment?

If you meet the criteria for the Climate Action Incentive Payment (CAIP), expect to receive it on the 15th of April, July, October, and January. It's important to be aware that if the 15th falls on a Saturday, Sunday, or a federal statutory holiday, the payment will be processed on the last business day before the 15th.