How do Federal Carbon Tax Rebates Work in Canada?

The federal carbon tax is always a controversial topic. Both environmental and financial issues are often surrounded by strong, dissonant opinions, so it’s no surprise that every news related to the program — or even to its rebates — generates more doubts, concerns and, sometimes, misinformation. To help sort it out, let’s get to the facts regarding the federal carbon tax and how the rebates will work for the provinces in Canada.

Ontario, Manitoba, Saskatchewan and New Brunswick are the four provinces in Canada that rejected the carbon tax (or couldn’t meet the climate requirements) proposed by the federal government. Then, earlier in 2018, Prime Minister Justin Trudeau announced not only that the tax will be imposed in these four regions, but also that the residents will be reimbursed for such expenditures as part of the “Climate Action Incentive.” On January 1, 2020, a federally imposed carbon tax also came into effect in Alberta.

Essentially, this means new taxes on electricity, gas and heating that come from “dirty energy sources.” The federal levy went into effect on April 1, 2019, and will only impact the provinces that aren’t already covered by a local carbon tax program. The main idea behind it is to make fossil fuels less accessible, thereby reducing greenhouse gas emissions and incentivizing green energy use.

Canadians in these provinces will pay a certain amount per tonne of fossil fuels. However, the federal government provides residents with incentives, so the measures don’t turn into a financial burden for Canadians. For all of the four provinces inside of the imposed program, the average household will receive back more than the money it paid in rebates.

In Saskatchewan, for example, the average family paid $403 in 2019, and received $598 back as incentives (which means a positive balance of $195), according to The Globe and Mail. The money is reimbursed as part of the federal tax returns, or subtracted from any debts you may have with the Canada Revenue Agency.

When will it happen?

Starting in April 2019, the federal carbon tax will go up every year. The Liberal government has already announced the prices for dates until 2022, so families can know what to expect for the next few years and get to know how much they will earn back for rebates.

The difference between the tax-related costs and the rebates will only grow higher. As an example, Manitoba residents will start receiving $336 back in 2019. Come 2022, the average reimbursement for the province will be $797, more than double the initial amount.

Check the table below to learn more about the expected gains for the next four years, considering the difference between the carbon tax and the rebates, according to Environment and Climate Change Canada.

Positive balance for consumers: The difference between the federal carbon tax and its rebates per year

Rebates for a couple in 2024:

The carbon tax explained: What is the carbon tax, how does it work, and where does the money go?

As the federal government suggests, the carbon tax puts “a price on pollution” so people can reduce their carbon footprint. For the next years, Canadians will pay a higher price for “dirty energy.” The primary goal is to reduce Canada’s greenhouse gas emissions by 200 million tonnes by 2030. By 2020, the Canadian government expects to reduce such emissions already by up to 60 million tonnes.

Many countries in the world, including France, Germany and Iceland, are going through similar changes in order to meet the United Nations’ 2030 Agenda for Sustainable Development requirements and the key points of the Paris Agreement.

Yet, governments face a lot of controversy with such decisions, as they can affect people’s financial lives and make some products or services less affordable. That’s why such decisions tend to be followed by governmental incentives like rebates, which makes the transition from fossil fuels to green energy smoother. It sounds better for the environment and for families.

All Canadians will pay for the carbon tax, especially industries, and the revenue will be used according to each provincial government. In most cases, local governments will use the money to offer rebates, spend on climate change-related issues, reduce other taxes, and provide support for affected sectors.

Federal carbon tax rebates in Canada

The five provinces under the federal carbon tax are Ontario, Manitoba, Saskatchewan, Alberta and New Brunswick. Although part of the same program, each area has its own specificities and energy-related issues, and the charges and rebates for each one of them take this into account. If you want to know how the federal carbon tax rebates will work in Canada, check the detailed info for each province below.

How to claim the carbon tax rebate?

According to the Climate Action Incentive official website, Canadians will be able to claim their carbon tax rebate on their tax return. The process will include filling out a quick form detailing the number of people in the family unit (both adults and children), as well as whether the family lives in a small or rural community. The payment will be made through the Canada Revenue Agency (CRA).

Ontario rebates

In case you’re wondering if there are carbon tax rebates in Ontario, know that they will be available once the carbon tax goes into effect in April 2019. The average refund in Ontario will be $307 in 2019. Values may change according to the size of each family. A single adult, for example, will receive $154 in the first year, and rebates will increase with time. The expected average rates for 2022 will be up to $718, and in 2023 up to $976.

Manitoba rebates

According to Environment and Natural Resources Canada, the federal carbon pollution pricing system will apply in Manitoba as the local government announced that it has no intention of implementing a carbon tax.

In Manitoba, a family of four will receive $339 in 2019 through the Climate Action Incentive payments, whereas a single adult, or the first adult in a couple, will receive $170. Come 2022 rebates will be up to $801 in the province, while 2023 number will rise up to $1,056.

The revenue from the tax will go back to Manitoba residents through rebates, and provide support to local schools, hospitals, small and medium-sized businesses, colleges and universities, municipalities, not-for-profit organizations and indigenous communities.

Saskatchewan rebates

The federal plan will also apply in Saskatchewan, especially to large industrial facilities that emit 25,000 tonnes or more of carbon dioxide equivalent (CO2e) per year, except for electricity generation and natural gas transmission pipelines, according to the official Environment and Climate Change Canada page. The province estimates it will cover approximately 11 percent of the region’s emissions.

Most of the proceeds collected by the federal government will be returned directly to Saskatchewan residents through the Climate Action Incentive payments. Also, part of the revenue is going to provide support for particularly affected sectors in the province.

In 2019, a single adult, or the first adult in a couple, will receive $128 in rebates. The second adult in a couple will receive $64. In 2022, however, discounts will be up to $1,459 for a family of four. In 2023 families can expect rebates up to $1,360.

New Brunswick rebates

In New Brunswick, the proceeds collected by the federal government will also provide support for particularly affected sectors and used for rebates.

In 2019, a single adult or the first adult in a couple will receive $128. The second adult in a couple will receive $64.

However, come 2022, the Climate Action Incentive payments will be $303 for single adults and $607 for a family of four.