Climate Action Incentive
(For Saskatchewan, Manitoba, Ontario, and Alberta only)
Before you start
The climate action incentive payment is a tax-free amount paid to help individuals and families offset the cost of the federal pollution pricing. It consists of a basic amount and a 10% supplement for residents of small and rural communities in Saskatchewan, Manitoba, Ontario, and Alberta.
Prior to 2021, the climate action incentive was a refundable tax credit claimed annually on a tax return.
As of 2021, this credit is now known as the climate action incentive payment (CAIP). The CAIP will now be paid as a quarterly benefit. If the individual is entitled to this benefit, they will automatically receive it four times a year, starting in July 2022. Individuals no longer need to apply for the CAIP as the CRA will determine their eligibility when they file their taxes.
Important note
In order to continue receiving payments for the CAIP, individuals must continue to file a tax return every year.
To be eligible, the individual must be a resident of Alberta, Saskatchewan, Manitoba or Ontario on the first day of the payment month and the last day of the previous month.
An individual must also meet at least one of the following conditions:
- they were 19 years of age or older
- they have (or previously had) a spouse or a common-law partner
- they are (or previously were) a parent who live (or previously lived) with their child
For more information, go to Climate action incentive.
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Need to know
Only one person per family (either the individual or their spouse or common-law partner) can claim the CAIP payment on behalf of all eligible family members (qualified dependants).
For the 2018 to 2020 tax years, an individual and their spouse or common-law partner had to choose who would be claiming the CAI in order to receive the credit on their tax return.
As of the 2021 tax year, the credit will be paid to the spouse or common-law partner whose tax return is assessed first.
A qualified dependant is a person who meets all of the following conditions for the year in question:
the individual’s cohabiting spouse's or common-law partner's child or a person dependent on either of them for support on December 31
resided with the individual on December 31
was under 19 years of age on December 31
was not married or living with a common-law partner on December 31
was not a parent who lived with their child on December 31
was not exempt from income tax in Canada at any time in the tax year, because they were an officer or servant of the government of another country, such as a diplomat or a family member who resided with such a person, or an employee of such a person
If at any time during the year, any of the following situations apply to the individual or their eligible family members, the credit cannot be claimed:
they were a non-resident of Canada
they were confined to a prison or a similar institution for a period of at least 90 days
they were a person in respect of whom a children's special allowance (CSA) was payable
they were a government servant or officer from a foreign country
Note
The CAI payment cannot be claimed for a spouse, common-law partner, or qualified dependant if they passed away before April 1, 2022.
For the purpose of the CAI supplement for residents of small and rural communities, individuals must have lived outside of a census metropolitan area (CMA) on December 31 of the tax year, as defined by Statistics Canada in the last census. To claim the supplement, individuals must complete Schedule 14 by ticking the box at line 60104.
Individuals cannot claim the supplement for residents of small and rural communities if their principal place of residence was located in one of the following CMAs:
Alberta: Calgary, Edmonton, or Lethbridge
Ontario: Barrie, Belleville, Brantford, Greater Sudbury/Grand Sudbury, Guelph, Hamilton, Kingston, Kitchener-Cambridge-Waterloo, London, Oshawa, the Ontario part of Ottawa-Gatineau, Peterborough, St. Catharines-Niagara, Thunder Bay, Toronto, or Windsor
Manitoba: Winnipeg
Saskatchewan: Saskatoon or Regina
To find out if an individual qualifies for the 10% supplement for residents of small and rural communities, refer to the CMA tables.
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Screen-by-screen instructions
Disclaimer
This training uses screenshots taken from prior versions of the UFile CVITP software. Consequently, the images may differ slightly from the current version of UFile CVITP. The content is accurate and generally, the only difference will be the tax year being referenced. Should the current year’s software contain any significant changes, a new screenshot will be published as soon as possible.
The screen-by-screen instructions are based on how the CAI was claimed for the 2018 to 2020 tax years. The process has been simplified for the 2021 tax year.
Text version
UFile screen
Under Interview tab
Family Head sub-tab
CRA question topic is highlighted
Climate action incentive section is highlighted
Climate Action Incentive, Supplement for residents of small and rural communities
Select the principal place of residence of the taxpayer on December 31 is highlighted
Climate Action Incentive
If the individual’s province of residence is Saskatchewan, Manitoba, Ontario, or Alberta when entering their information in the Identification section, UFile will automatically include the Climate Action Incentive section on the CRA questions page.
To claim the Supplement for residents of small and rural communities, under Climate Action Incentive, Select the principal place of residence of the taxpayer on December 31
Text version
UFile screen
Under Interview tab
Family Head sub-tab
CRA questions topic
Climate Action Incentive, Supplement for residents of small and rural communities
Select the principal place of residence of the taxpayer on December 31 is highlighted
Selection menu is highlighted
Census metropolitan area (CMA)
- Your choice will be either Outside of a census metropolitan area (CMA) or a CMA
Note: In this example, the province of residence for the individual is Ontario, so all of the CMAs for Ontario are displayed.
If you selected Outside of a census metropolitan area (CMA), UFile will automatically complete Schedule 14. No further action is required by you, or the individual, in order to claim the supplement.
To determine if an individual resided outside of a CMA, go to Find out if you qualify for the supplement for residents of small and rural communities
Text version
UFile screen
Under Interview tab
Family Head sub-tab
Controls topic
MaxBack controls page
Schedule 14 – Climate action incentive
Do you wish to claim the Climate action incentive (line 45110)? is highlighted
Do not claim is highlighted
Spouse or common-law partner claiming the CAI
Note: These instructions apply to the 2018 to 2020 UFile CVITP versions. It is possible that the instructions may differ when using the 2021 UFile CVITP version.
Note: When filing returns for a couple, the software will automatically apply the credit to the individual who chooses to make the claim in the Interview setup.
However, if the individual indicates that their spouse or common-law partner has already filed their return and as such, has already claimed the CAI, you will need to select Controls on the left side menu, which will generate the MaxBack controls page.
- Proceed to the section Schedule 14 – Climate action incentive and select Do not claim when answering the question Do you wish to claim the Climate action incentive (line 45110)?
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Example: Claiming the climate action incentive
Instructions: Practice entering information into the mock profile
Open the UFile CVITP software and use the background information, slips required (tax slips, receipts, etc.), and points to remember sections provided in the example to enter all the necessary information. Once completed, compare your results with the solution provided.
Disclaimer
Examples have been created using fictional names. Any resemblance to persons real, imaginary, or deceased is purely coincidental. There is no intention for examples to depict stereotyping on any basis.Background information Name Louise Bradley Social insurance number (SIN) 000 000 000 Address 123 Main Street
City, Province X0X 0X0
Date of birth September 29, 1991 Marital status Single Slips required:
- T4 – Statement of Remuneration Paid
Since Louise is a resident of Ontario and was living in Hamilton, on December 31, 2020, Louise is eligible to claim the climate action incentive (CAI).
Points to remember:
Once you have selected the individual’s province of residence as Ontario on December 31, 2020 in the Identification section of UFILE, the software will automatically add the Climate Action Incentive section to the CRA questions page in the left side menu
Select the Province of residence on December 31 of the individual:
since Louise lives in the census metropolitan area of Hamilton, choose CMA: Hamilton from the drop-down menu
To enter the T4 slip, click T4 and employment income in the left side menu and choose T4 income (earned in any province except Quebec)
Information slip for Louise Bradley:
- T4 – Statement of Remuneration Paid
Text version
T4A – Statement of Remuneration Paid
Protected B
Employer’s name: Crafts R Us
Employee’s name and address:
Last name: Bradley
First name: Louise
123 Main Street
City Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income – line 10100: 30,000.00
Box 16: Employee’s CPP contributions – line 30800: 1,340.00
Box 18: Employee’s EI premiums – line 31200: 430.00
Box 22: Income tax deducted – line 43700: 4,500.00
Box 24: EI insurable earnings: 30,000.00
Box 26: CPP/QPP pensionable earnings: 30,000.00
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Solution: Claiming the climate action incentive
Instructions
This solution was calculated using the 2020 version of UFile CVITP, with Ontario as the province of residence. In order to validate your results, make sure you refer to the federal totals generated on lines 15000, 23600, 26000, and 42000, as provincial or territorial calculations may vary depending on the province/territory selected in the Identification section. To view your results, click the Federal summary link found under the Review tab when you have completed the example.
Text version
Louise Bradley
Total income
10100 Employment income: $30,000.00
15000 Total income: $30,000.00
Net income
22215 Deduction for CPP and QPP enhanced contributions: $76.57
23600 Net income: $29,923.43
Taxable income
26000 Taxable income: $29,923.43
Non-refundable tax credits
30000 Basic personal amount: $13,229.00
30800 CPP or QPP contributions through employment: $1,263.43
31200 Employment insurance premiums through employment: $430.00
31260 Canada employment amount: $1,245.00
33500 Total: $16,167.43
33800 Total @ 15%: $2,425.11
35000 Non-refundable tax credits: $2,425.11
Refund or balance owing
42900 Basic federal tax: $2,063.40
40500 Federal foreign tax credit (T2209): $0.00
40600 Federal tax: $2,063.40
41700 Line 40600 – 41600: $2,063.40
42000 Net federal tax: $2,063.40
42800 Provincial or territorial tax: $331.07
43500 Total payable: $2,394.47
43700 Total income tax deducted: $4,500.00
Payments and credits
45110 Climate action incentive: $300.00
47555 Canadian journalism labour tax credit: $0.00
48200 Total credits: $4,800.00
48400 Refund: $2,405.53
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