In 2016, the federal government introduced the Pan-Canadian Framework on Clean Growth and Climate Change that gave the provinces and territories the flexibility to develop their own carbon pricing systems but only if they met the minimum federal standard. Otherwise, a federal backstop price on carbon emissions applies to any jurisdictions not meeting the federal standard. Currently, the following jurisdictions do not meet the federal standard: Saskatchewan, Manitoba, Ontario, Alberta, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. Accordingly, the federal carbon pricing system thus applies to these provinces.
In 2018, the federal government introduced the Climate Action Incentive (“CAI”), a refundable credit available to individuals resident in provinces where the federal carbon pricing system was imposed. Although this was a federal payment, the payment amounts vary by jurisdiction. More recently, the CAI has been rebranded as the Canada Carbon Rebate (“CCR”).
At first, the refundable tax credit was payable as refund when the individual filed their annual tax return. However, the CCR is now distributed in quarterly payments made in April, July, October and January via the benefit system to eligible individuals residing in Alberta, Saskatchewan, Manitoba, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and New Brunswick.
Calculating the credit
The CCR amount due includes a basic amount for all "eligible individuals" (discussed below) and a 10% supplement for "eligible individuals" residing in small and rural communities outside a census metropolitan area (CMA). Starting in the 2024-2025 period, the 10% supplement is increased to 20%. To find out if an individual resides outside a CMA, go to: https://www12.statcan.gc.ca/census-recensement/2016/ref/dict/geo009-eng.cfm.
The CCR amount for a year is paid quarterly via the benefit system on April 15, July 15 and October 15, and January 15. If an individual is registered for direct deposit with the CRA, they should receive their payment directly in their bank account. Each quarterly payment represents 25% of the annual CCR amount. For example, for a fuel charge year running from April 1, 2024 to March 30, 2025, the payments are made on April 15, 2024, July 15, 2024, October 15, 2024, and January 15, 2025.
For a household, the basic CCR amount for the year is the sum of:
- A base amount for the eligible individual;
- An amount for an eligible spouse or common-law partner of the eligible individual;
- An amount for a single parent's "qualified dependant" (as defined below) of the eligible individual; and
- An amount for other "qualified dependants" of the eligible individual.
For a household, the supplement for residents of small and rural communities corresponds to 20% of the basic CCR amount otherwise calculated. To claim the CCR supplement for residents of small and rural communities, you must reside outside a census metropolitan area (CMA) at the beginning of the "specified month" (defined below as April, July, October and January).
An "eligible individual" and their spouse/common-law partner (if applicable) must file their tax return annually to receive the CCR payment and tick the box their tax return to confirm that they reside outside a CMA to receive the 20% supplement. The payment is made to the one whose return is first assessed by the CRA.
Base year and payment period
The base year is the taxation year of the tax return from which information is taken to calculate the CCR amount and the payment period is the 12-month period running from April 1 of the year immediately following the base year to March 30 of the second year following the base year. For example, if the base year is 2024 for the 2024 tax return, the CAI payment period runs from April 1, 2025 to March 30, 2026.
Change of situation
The CRA must be informed immediately of the following changes in the individual’s situation:
- Change of number of children in the individual’s care;
- Change of the individual’s marital situation;
- Death of the individual or individual’s spouse or common-law partner; or
- Move of the individual to a new address.
Payment amounts
The federal government has designated the following quarterly payments for April 15, July 15, and October 15 of 2024, and January 15 of 2025 to eligible individuals:
