Toronto, November 12, 2024 – The Canadian Federation of Independent Business (CFIB) has recently learned that the government will be taxing its long-overdue small business carbon tax rebates when they are issued in December.
“This is deeply offensive to small firms and, frankly, a ridiculous idea,” said Dan Kelly, CFIB president. “Government is now planning to tax a tax rebate – it would be like charging income taxes on someone’s tax refund. Taxing the carbon tax rebate also throws out of the window any pretense that the carbon tax is revenue neutral to government as it will be collecting hundreds of millions in corporate income tax revenue on the rebate.”
Months ago, the Canada Revenue Agency told CFIB in writing that it understood the carbon tax rebate would be tax free as it is modeled after the Canada Carbon Rebate for individuals, which is exempt from personal income taxes.
“This made sense to us. But after we asked the Department of Finance for final confirmation of this information, they told us the small business rebate would be taxable as it is considered government assistance,” Kelly added. “Rebating a small portion of the carbon taxes paid by small business is about as far from government assistance as I can imagine.”
The entire carbon tax system has been incredibly unfair to small businesses since the beginning. After promising small firms would receive 10% of the total carbon tax revenue as rebates in 2019, the government sat on the money for five years. Only after a significant CFIB lobbying campaign, a petition signed by thousands of small business owners and the support of provincial premiers and opposition leaders did the government finally agree to return the $2.5 billion that had accumulated in small business rebates.
Making matters worse is the fact that the carbon tax will rise again on April 1, 2025, while, at the same time, government slashes the future rebate to small firms from 9 to 5% of total revenue. CFIB has sent an open letter to Minister of Finance Chrystia Freeland urging the government to abandon this approach.
“It’s not surprising why 83% of small business owners now oppose the carbon tax. Delaying, then taxing, then slashing promised rebates to small business are yet additional reasons why the carbon tax needs to be scrapped entirely,” Kelly concluded.
Business owners can use CFIB’s calculator to estimate how much they’re eligible to receive in carbon tax rebates and sign a petition asking the government to scrap the tax.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
public.affairs@cfib.ca
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.