Climate Action Incentive Payment

January 27, 2023

The Office of the Superintendent of Bankruptcy (OSB) has published a Position Paper that clarifies how Climate Action Incentive Payment (CAIP) should be treated in an insolvency proceeding, now that the CAIP is paid quarterly to eligible residents of Alberta, Saskatchewan, Manitoba and Ontario. Prior to July 2022, the payments were dealt with as a refundable tax credit claimed annually on personal income tax returns. Payments will also be made to eligible residents of Newfoundland and Labrador, Nova Scotia and Prince Edward Island starting in 2023. Note that while the list of provinces from which eligible residents will receive payments is subject to further change, the treatment of the CAIP  during insolvency remains the same.

The OSB ’s position is that regardless of when payments are received, the CAIP  is property of the bankrupt under paragraph 67(1)(c) of the Bankruptcy and Insolvency Act (BIA) when calculated in the year of bankruptcy or a prior year. Although the amount paid is based on the number of members in the family unit, the entire amount vests with the trustee as property of the bankrupt.

Also, any CAIP calculated based upon post-bankruptcy years is to be included in the calculation of surplus income payments under section 68 of the BIA .

For details, please read the position paper, and for further clarification on the treatment of these and other similar payments, and the OSB ’s position on them, please see the explanatory note, both now available on our website: