We all know it’s crucial, for ourselves and future generations, that we act now to help protect the environment. There are lots of tools we can use in the fight against climate change, and it turns out your wallet is one of the most effective.

That’s the core concept behind carbon taxes. Basically, it’s a system for putting a price on pollution, which encourages people and businesses to find ways to reduce emissions that harm the environment.

In the summer of 2018 Canada’s federal government installed a carbon tax, which implemented a carbon pricing system in any provinces that didn’t already have a suitable system in place. This led to higher prices for fossil fuel energy sources like the gasoline you pump into your car or the natural gas you use to heat your home. (For a detailed explanation of the carbon tax and how it works, check out the Canada Drives blog post Carbon Taxes and Rebates in Canada Explained.)

To offset these higher costs, the federal government provides carbon tax rebates which, for some people, will surpass the higher fuel prices so they’ll end up saving money in the end. 

How Does the Carbon Tax Rebate Work?

The simple answer is: it depends on which province you live in. Some of the provinces, like B.C. and Quebec, created their own carbon pricing systems before the federal government stepped in. The provinces of Alberta, Saskatchewan, Manitoba, Ontario, and New Brunswick are required to use the federal government’s carbon tax system, although some of them are currently contesting this in court.

Here’s a quick breakdown of how the carbon tax rebate works in each province:

PROVINCE

CARBON TAX REBATE DETAILS

GOVERNMENT WEBSITE LINK (for more details)

Alberta

No rebate 


Carbon tax system starts Jan. 1, 2020

Alberta carbon levy and rebates

British Columbia

Up to $154.50 for individual, spouse, or common-law partner


Rebate payment included in quarterly GST/HST credit

BC climate action tax credit

Manitoba

$339 for a family of four


Rebate payment included in federal tax return

Manitoba and pollution pricing

Newfoundland and Labrador

No rebate

Newfoundland and Labrador carbon pricing plan

New Brunswick

$256 for a family of four


Rebate payment included in federal tax return

New Brunswick and pollution pricing

Northwest Territories

$260 per adult and $300 per child

Implementing the NWT Carbon Tax 

Nova Scotia

No rebate

Nova Scotia and pollution pricing

Nunavut

No rebate

Nunavut and pollution pricing

Ontario

$307 for a family of four


Rebate payment included in federal tax return

Ontario and pollution pricing

Prince Edward Island

No rebate


Discounts on some public programs

P.E.I. saving you money while helping the environment

Quebec

No rebate


Uses cap-and-trade system

Climate Change Action Plan

Saskatchewan

$598 for a family of four


Rebate payment included in federal tax return

A Made-in-Saskatchewan Climate Change Strategy

Yukon

No rebate

Yukon and pollution pricing

How Do I Get the Carbon Tax Rebate?

For most of the provinces that provide carbon tax rebates, getting the rebate is pretty simple. All you have to do is file your taxes and the rebate will be included in your tax return — aside from B.C., where the rebate accompanies the quarterly GST/HST credit.

If you need more details, check out the link for your province in the table above.

Using the Carbon Tax Rebate to Save

According to the federal government’s calculations, most Canadians who qualify for a carbon tax rebate will actually end up receiving more money than they pay through carbon taxes. This provides a good opportunity to increase your savings (or start saving if you haven’t already). 

Save Money without Lifting a Finger

One of the easiest ways to sock away some funds for the future is to set up a separate savings bank account. You can transfer your carbon tax rebate into this new account to get it started, or to give it a boost. Then get your bank to set up an automatic transfer system to divert a small chunk of money into the savings account with every paycheque. Eventually, you won’t even notice the diverted funds and the savings will grow over time.

Compounding Interest: The Magical Way to Increase Your Savings

If you’re not familiar with the concept of compounding interest, it basically means earning interest on top of interest. You can set up an automatic savings system like we described above, and if you choose an investment account to put your savings into the interest can compound and your savings will grow significantly over the next few years.

How significantly, you might ask? Plug some sample numbers into this compound interest calculator and you’ll see for yourself how magical a savings tool it can be. 

There are a variety of investment accounts you can choose from, including GICs (guaranteed investment certificates), mutual funds, and ETFs (exchange-traded funds). Talk with your bank to figure out which type of account works best for your financial goals and preferred risk level.

Whether you’re looking to get a jump-start on your savings plan or you want to clear out some old debt so you can start saving from a clean slate, Fresh Start Finance can help you get on solid financial footing. In around five minutes you can apply for a personal installment loan of up to $15,000 with great interest rates and no hidden costs. And if you’re approved the money can be in your account in less than 48 hours!


Fresh Start Finance serves Canadians facing all types of credit situations with practical advice and credit-building solutions. We also offer quick-and-easy secured and unsecured installment loans to help you take those first steps to a better financial future. Apply today to see how we can help!