The Canada Carbon Rebate, formerly known as the Climate Action Incentive Payment (CAIP), is a tax-free sum designed to assist eligible individuals and families in covering the expenses of the federal pollution pricing. It comprises a basic amount along with a supplement for residents of small and rural communities.
In provinces where a federal fuel charge is implemented due to either request or absence of their own carbon pricing system meeting federal standards, the charge is imposed. Presently, this fuel charge is in effect in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. All revenues collected directly go back to the respective province through the quarterly Canada Carbon Rebate, distributed directly to Canadian residents.
For households in provinces under the federal fuel charge, a family of four could receive up to $1,800 under the basic Canada Carbon Rebate in the 2024-25 fiscal year. Initial payments will commence in April 2024, followed by subsequent quarterly payments in July 2024, October 2024, and January 2025.
In an effort to maintain affordability for all Canadians through carbon pricing, the government is proposing an increase in the top-up for rural residents from 10 percent to 20 percent through legislative amendments in Bill C-59. This adjustment, beginning in 2024-25, acknowledges the higher energy requirements and limited access to cleaner transportation options for rural Canadians.
To receive the Canada Carbon Rebate, individuals must file their annual tax return. Rural residents must indicate their eligibility for the rural top-up on their tax return to receive it. Those registered for direct deposit with the Canada Revenue Agency will have the rebate deposited into their bank account every three months; otherwise, it will be sent via cheque. If there's a spouse or common-law partner, the individual filing their tax return first will receive the rebate for all household members, including children.
The federal government encourages financial institutions to clearly identify the Canada Carbon Rebate direct deposits in Canadians' bank accounts every three months.
In provinces with the federal fuel charge, most households receive more through the Canada Carbon Rebate than they pay under the federal carbon pollution pricing system, with lower-income households benefiting the most.
The table below compares estimates of the average cost per household of the federal system in each of these provinces for 2024-25 with Canada Carbon Rebate amounts per household. As all revenues are returned to the province of collection, the average net benefit varies by province and is higher in provinces with greater fossil fuel consumption.