Carbon Tax Rebate for Small Businesses

After 5 long years of empty promises, the Government of Canada is finally honoring its commitment to rebate some of the carbon tax paid by small businesses.

According to the Government of Canada, the Canada Carbon Rebate for Small Firms will return over $2.5 billion to nearly 600,000 small businesses by the end of 2024. Fuel costs from prior years will be partially recovered by businesses through this tax credit, with payments based on the province and number of employees. The government’s announcement indicates that companies with fewer than 500 employees can expect to receive:

• $1,156/employee in SK
• $401/employee in ON
• $591/employee in AB
• $481/employee in MB
• $180/employee in the Atlantic provinces, which joined the federal regime later than the former provinces.

The CRA will automatically determine and issue refunds by the end of 2024 if your small business corporation’s 2023 T2 tax return was filed on or before July 15, 2024. Legislation is working it’s way through the system that would grant eligibility to companies who file their 2023 T2 on or before December 31, 2024, however they will be paid the Carbon Tax Rebate later than those who filed on time.

Typical with this government’s style: If your company has no employees and you pay yourself dividends instead of salaries, you clearly use more carbon and so you are bad in the eyes on this government and so there is no carbon tax rebate available for your small business.

If you have any questions about how the carbon tax rebate may impact your small business, please do not hesitate to contact us.