Delivering Climate Action Incentive Payments Quarterly


The Government of Canada has taken action to ensure that there is a price on carbon pollution across Canada. To ensure that carbon pollution pricing remains affordable for Canadians, direct proceeds from the federal pollution pricing system are returned to the jurisdictions where they were collected and the majority of proceeds are returned directly to Canadians through Climate Action Incentive (CAI) payments. These payments mean some 8 out of 10 families receive more money back than they pay in direct costs under this system.

Under the federal carbon pollution pricing system, the government applies a price on pollution in jurisdictions that do not have a system of their own that meets the federal stringency requirements — Ontario, Manitoba, Saskatchewan and Alberta. In those jurisdictions approximately 90 per cent of direct proceeds from carbon pollution pricing are returned to residents of those provinces through CAI payments.

Budget 2021 proposed changing the delivery of CAI payments from a refundable credit claimed annually on personal income tax returns to quarterly payments made through the benefit system. This will deliver Canadians’ CAI payments on a more regular basis.

Under this proposal, in order to return fuel charge proceeds in advance of their collection for a quarter, CAI payments would be delivered at the beginning of each quarter. Payments delivered to Canadians in April would thus return the fuel charge proceeds collected during the April-June quarter, July payments would return those for the July-September quarter, October payments would return those for the October-December quarter, and January payments would return those for the January-March quarter. Payment amounts would increase in April of each year as the fuel charge increases. 

The Department of Finance has released draft legislative proposals that would implement this change.

To give the Canada Revenue Agency (CRA) sufficient time to develop the new system, payments would 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).

CAI payments would no longer be claimed on personal income tax returns (starting with the 2021 tax return, for which amounts are specified to be zero). That said, individuals would still need to file a tax return in order to receive CAI payments for the upcoming fuel charge year. Individuals would also have to indicate on their return if they are eligible to receive the rural supplement for the upcoming year, a 10% supplement to the payment which reflects rural residents’ more limited access to clean transportation options.

CAI payments would continue to be based on family composition and province of residence, but eligibility would be determined on a quarterly basis.

The Minister of Finance would specify CAI payment amounts for 2022-23 in early 2022. 

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