Hurry! File T1s by March 15 to Get New Canada Carbon Rebate (CCR)

Evelyn Jacks

The carbon tax is increasing again on April 1 and for some, so is the federal rebating system to offset it. Taxpayers and their spouses must file their T1 returns electronically by March 15 to get the new Canada Carbon Rebate (CCR) by the first payment date on April 15.  Otherwise, they will have to wait until the next payment date in July.  Confused?  You are not alone; there have been lots of changes.  Here’s what you need to know about this rebranded carbon tax rebate and the new amounts payable for 2024-2025.

Not All Canadians Who Pay the Carbon Taxes Qualify for a Canada Carbon Rebate.    Canadians subject to the federal fuel charge for carbon taxes in eight provinces can qualify to receive the CCR  - that’s people in  Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. In provinces that have their own carbon pricing system that meets the federal benchmark, no federal rebate is paid.  This includes B.C. and Quebec.

Carbon Tax Rebate Confusion.  The initial carbon tax rebate, called the Climate Action Incentive (CAI), was refundable and from 2018 to 2020, received with the annual tax refund by filing a tax return. There was a Schedule 14 used to file to claim the 10% supplement for rural residents who live outside of a Census Metropolitan Area (CMA).  In 2021, the CAI changed to a quarterly payment.  A tax return was still required to be filed, but Schedule 14 was dropped.  Rural residents needed to make a checkmark on the identification section of their return – easy to miss – to qualify for their supplement.

Next year’s return will now refer to the Canada Carbon Rebate, the rebrand that was introduced last week.   Further, the supplement will increase to 20% starting in April.  

It's noteworthy that  the word “tax” is missing from the names of both carbon tax rebates.  That could be part of the reason for the confusion.  According to a December 2023 Angus Reid poll, 70% of Canadians do not understand or agree with this carbon tax-rebating regime. 

While the federal government wants Canadians to believe that 80% of households will earn back more than they pay – as along as they file a tax return - the Angus Reid Poll actually found the following from those who have been entitled to receive the former CAI rebate:

• About one-quarter of residents say they do not receive a rebate
• About one-quarter are unsure either whether they received one, or what it amounted to.
• The largest group agreed they received a rebate, but feel they paid more in extra costs than they received back.

Another reason for the rebate confusion is that in actual fact, people can’t identify it.  The payment is not well labelled – either on cheques received or electronically at the financial institution.  The federal government notes in their news release about the rebate name change that they are asking the institutions to start consistently labelling future payments deposited as the Canada Carbon Rebate. 

So, while Canadians understand they pay carbon taxes, they are not aligned on the carbon tax rebate structure and how it compensates them for carbon pricing. 

Make a Difference.  The carbon tax rebates are not income tested.  But filing a T1 by both spouses is a prerequisite to receiving the carbon tax rebate.  Financial intermediaries – financial advisors, accountants and bookkeepers – can all work together to counsel young adults to file to get theirs; and they can file missed returns of prior years to make sure the CAI that was missed along with any other credits or refunds, are recovered.