Introduction to Canada Carbon Discount
The Canada Carbon discount was a program designed to return a portion of the revenue collected from the federal carbon tax to residents. To receive this discount, individuals had to submit an income tax return for the previous year, even if they had no income. The payments were based on income tax returns from the previous years, with the first payment of 2025 being based on 2023 returns, and the second payment based on 2024 returns. However, the third and fourth payments were canceled after the liberal government ended the federal fuel fee and discounts.
Payment Schedule
The Canada Carbon discount was distributed four times a year: January 15, April 15, July 15, and October 15. Before 2021, the climate action incentive was a refundable tax credit for personal income tax returns.
Purpose of the Carbon Discount
The carbon discount was paid out of the money collected as part of the Canadian carbon price system. In 2019, the federal government imposed a price on carbon pollution to reduce greenhouse gas emissions. The national minimum price was set at $20 per tonne of carbon dioxide equivalent (CO2E) and increased to $50 in 2022, $65 in 2023, and $80 in 2024. The minimum price is set to continue increasing every April by $15 to up to $170 per ton in 2030.
How the Carbon Price Worked
The carbon prices were collected through fuel charges and a fuel-based price system for industry. Drivers in certain provinces paid a fuel charge of $0.1431 per liter of gas, which increased to $0.1761 in 2024 and $0.2091 in 2025. Provincial and territorial governments could use the federal carbon pollution pricing system or develop their own carbon price model or cap-and-trade system, as long as it met or exceeded federal standards.
Distribution of Revenue
Ottawa returned 90% of the carbon price revenue to the jurisdiction where it was collected, with the remaining 10% used to support schools, small and medium-sized businesses, hospitals, and indigenous programs.
Eligibility for Carbon Discount
To receive the Canada Carbon discount, individuals had to be residents of a participating province, at least 19 years old, and have filed an income tax return for the previous year. Certain individuals under 19 could also be eligible if they met specific requirements.
Conclusion
The Canada Carbon discount was a program aimed at returning a portion of the revenue collected from the federal carbon tax to residents. Although the program has ended, it played an important role in reducing greenhouse gas emissions and supporting individuals and communities affected by the carbon tax. Understanding how the program worked and who was eligible can provide valuable insights into the Canadian government’s efforts to address climate change.