Climate Action Incentive Payments: Claimed by 97% of Eligible Families

Beth Graddon

There have been several new tax and economic developments on climate change this month. Statistics on the Climate Action Incentive (CAI) payments became available, Albertans repealed their provincial carbon levy and the Final Report from the Expert Panel on Sustainable Finance was released.

Statistics from the 2018 tax filing season show that Climate Action Incentive (CAI) payments issued in Manitoba, Saskatchewan, Ontario and New Brunswick fall behind original estimates. That may be important news for Albertans, who will now pay carbon taxes under the federal regime and qualify for the CAI in the next tax filing season. It all makes for very interesting reading about future tax and economic developments.

The most recent statistics on the Climate Action Incentive payment released by the CRA show that as of June 3, 97% of families eligible for the rebate had claimed it. However, the total amount returned was only $1.75 billion – less than the $2.1 billion originally estimated by the federal government. This is also reflected in the average payment amounts, which come in lower than originally estimated, in each eligible province as well:

The total amount returned to taxpayers is an important number to watch, as legislation accompanying the implementation of the carbon pricing system requires that 90% of revenues collected be returned, and that’s what will determine if the rebate program is a success. An update has been promised by mid-July to reflect additional claims made by the self-employed whose filing deadline passed last week.

Despite this extra rebate given through the CAI, the average refund for individual taxpayers is less this year when compared to last. As of June 10, it was $1,679 versus $ 1,757 for the 2017 tax year . There’s an opportunity for tax and financial advisors to work with clients throughout the summer, to review potential errors or omissions to the 2018 filings, and request tax adjustments to reduce their tax burden and access the credits and benefits due to them.

In fact, Canadians in the original four provinces who filed their 2018 tax returns but did not claim the CAI payment still have the opportunity to do so. The CRA’s online ReFILE program can be used to send adjustments for 2018 tax returns (as well as for 2016 or 2017, for other adjustments).

Changes in Alberta. On June 13, Alberta announced that it has repealed its provincial carbon levy, and that it will join the provinces of Ontario, Manitoba, New Brunswick and Saskatchewan in implementing the federal carbon pollution pricing system as of January 1, 2020.

The Department of Finance estimates that households in the province will receive an average of $880 from the rebate in early 2020 (after filing their 2019 taxes) to help with the increasing costs resulting from the introduction of new pollution pricing fuel charges. The government has stated that for Albertans, $126 of the average payment will cover more than the increased fuel costs for January to March 2020; the first three months after the carbon pricing program comes into effect. The remaining rebate amount of $754 will offset the costs for the proceeding 12-months (April 2020 – March 2021). They’ve estimated that the average impact per household will be $610 for that 12-month period.

Additional changes are likely still ahead too since it is an election year. Last week, conservative leader Andrew Scheer pledged to repeal the Liberal’s carbon pricing (which has now been adopted by five provinces including Alberta) as part of his campaign for Prime Minister. If he wins, he intends on focusing on encouraging business to support green technology, rather than combatting climate change with higher taxation. Specifically, he plans to introduce the following measures:

• Requiring companies that produce at least 40 kilotonnes of emissions per year to invest in a fund to support green technology
• The “green patent credit” which will cut the corporate tax rate for companies that are developing and patenting green technology. The rate would go from 15% to 5%
• The “green homes tax credit” for Canadians who make eco-friendly home improvements

The Final Report from the Expert Panel on Sustainable Finance . This report contains 15 recommendations for achieving goals in addressing climate change over the long term by enabling “business-as-usual” financial services that embed the climate change opportunity into everyday business decisions, products and services. It’s vital reading for those seeking a glimpse into the future. It will be the subject of future columns as Knowledge Bureau Report will continue to provide ongoing coverage of Canada’s climate action initiatives as well as tax changes proposed throughout the election campaign process.

Additional educational resources: Enrol now to become a DFA-Tax Services Specialist™ , and pick up your copies of Essential Tax Facts, 2019 to share with your clients to help them increase their knowledge and tax-efficiency.

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