441-01678 (Taxation)

Climate action is critical to Canada’s long-term health and economic prosperity. Pollution pricing is widely recognized as effective and the most efficient means of reducing greenhouse gas emissions, which is why the Government of Canada has made sure that it is no longer free to pollute in Canada.

The federal price on pollution is revenue neutral for the government of Canada; the direct proceeds from the federal pollution pricing system remain in the province or territory where they are collected. Put simply, every dollar collected from the pollution price is returned.

In provinces where the federal fuel charge applies, 90 percent of direct proceeds are returned to residents of those provinces through Climate Action Incentive (CAI) payments. Most households receive more in CAI payments than the costs they face from the federal price on pollution, with low- and middle-income households benefitting the most, on average. The other 10 percent is used to support small and medium-sized businesses and Indigenous groups. Farmers are also receiving proceeds from the price on pollution through a refundable tax credit, meaning an estimated $100M was to be returned to farmers for 2021-22 and $120M will be returned for 2022-23.

This year, through quarterly payments, a family of four will receive: $1,544 in Alberta, $1,056 in Manitoba, $976 in Ontario, and $1,360 in Saskatchewan. As of July 2023, when federal pollution pricing began to apply in Atlantic Canada, a family of four will receive 3 quarterly payments totaling: $984 in Newfoundland and Labrador, $744 in Nova Scotia, $720 in Prince Edward Island, and $552 in New Brunswick (double payment in October). Future years will contain 4 quarterly payments.

On October 26, 2023, the government announced its intent to double the CAI rural top-up, from 10 to 20 percent, with increased payments to rural residents starting in April 2024. It also announced a proposed temporary, three-year pause of the fuel charge on deliveries of light fuel oil exclusively for use in providing heat to a home or building until the end of 2026-27.

The government will continue to take action to support the middle class and make life more affordable for Canadians.