Canada Revenue Agency: Go Green and Save 10% on Taxes

We all have to make sacrifices in order to make the environment better. It includes lifestyle changes as well as financial sacrifices. The CRA is rewarding one of them.

We humans have done a lot to harm the environment, especially in the last few centuries. But things have been changing lately. People are becoming more aware and making more informed choices, and it goes beyond isolated lifestyle choices. People are becoming aware of their power as consumers, and their purchase decisions are forcing organizations to rethink their environmental choices.

Relatively few things have been as intertwined with the environment as fossil fuel. To ensure that energy businesses are making cleaner and “greener” choices, the government has established a federal carbon tax. For now, it’s only applicable for the residents of Ontario, Manitoba, Alberta, or Saskatchewan, and to make the cost of this tax more “bearable,” the CRA is offering a tax rebate.

Climate action incentive

The climate action incentive (CAI) is a fixed amount that the residents of the four provinces mentioned above can claim. In addition, the people who hail from the rural areas of these provinces get an extra 10% supplement. The reason is that the carbon tax this incentive is introduced to offset is applied directly to the gas prices. And people from the rural areas typically consume more gas and have fewer public transport options.

Only one person per household can claim the CAI on their tax. The amount can be claimed for more than just one person in the household, though. If you are married and have two kids (that are considered qualified dependents), you might be able to claim a total of $600 in Ontario and $1,000 in Saskatchewan, plus 10% if you live in a rural area.

The amount will apply directly to the balance or add to your refund (if applicable).

Green investments

You can also show your commitment to the environment by investing in green companies, like Northland Power (TSX: NPI). The company develops and operates green energy assets in countries around the world. Currently, the company has the capacity to produce (net) 2,266 MW of electricity through its solar, wind, and natural gas assets.

But choosing Northland is not just an environmentally responsible option; it’s also a financially savvy choice. The company was growing at a steady pace for the last few years, but the growth trajectory took a sharp “up” in 2020. The stock has come down a bit from its 2020 peak, and it might currently be in its “normalization” phase, making it an excellent time to consider adding it to your portfolio. It also pays dividends at a 2.92% yield.

Foolish takeaway

The CAI is a flat-rate rebate and won’t vary based on your income levels. But it’s a decent amount, and even if it doesn’t offset the extra expenses you pay when you fill up on gas, it’s still better than nothing. But it comes with a few stipulations, and it’s imperative that before applying, you go through the details of this tax break and make sure you and the other family members you are applying for qualify for this benefit.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

More on Dividend Stocks

man shops at grocery store
Dividend Stocks

Choice Properties Pays Monthly: Does the Yield Compensate for Higher Rates?

Choice’s yield deserves a closer look at cash after property spending and financing costs.

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

Best Monthly Dividend Stocks on the TSX? My Top Picks for Today

Looking for monthly dividend income and an attractive growth profile? These two TSX stocks are my top picks today.

Read more »

oil pumps at sunset
Dividend Stocks

Canadian Natural Resources vs. Suncor: The Dividend Stock to Own Through 2026

Let’s compare Canadian Natural Resources and Suncor Energy across their financial performance, dividend track records, growth prospects, and valuations to…

Read more »

man studies at computer
Dividend Stocks

Here Are The 3 Canadian Stocks I’d Tell a New Investor to Buy ASAP

Discover strategies for investing in stocks that can help you thrive in a market filled with volatility and uncertainty.

Read more »

telecom towers concept for wireless technology
Dividend Stocks

BCE Stock Is Down 2% After Q3: Is the 5.8% Dividend Safe?

BCE stock slipped 2% after Q3 earnings. See whether the 5.8% dividend is safe, how free cash flow covers it,…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Too Busy to Invest? This Dividend Stock Deserves a Permanent Place In Your TFSA

This Canadian stock appears well-positioned to keep paying and growing its dividend and deliver solid capital gains in the long…

Read more »

monthly calendar with clock
Dividend Stocks

The TFSA Strategy I’d Use to Generate $600 in Monthly Tax-Free Income

A smarter TFSA approach is to prioritize sustainable total returns and diversification rather than chasing an arbitrary monthly income number.

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

How Much to Invest in Killam Apartment for $250 a Month in Dividends

Want $250 a month? Killam Apartment pays $0.06 a unit at $17.45. See how many units to buy, what Q3…

Read more »