Good News on Carbon Tax Rebates, but the Wait Isn’t Over!
On June 30, 2025, the government confirmed that it will introduce legislation ensuring that all past and future carbon tax rebates for small businesses are tax-free. They will also expand eligibility to those who filed their taxes on or before December 31, 2024.
While legislation still needs to be passed in the fall, your business can choose not to include the rebate as income when filing your 2024 taxes. However, your return could be reassessed, with interest, if the legislation does not pass.
CFIB is still seeking clarification on the refund process for businesses that have already filed their 2024 taxes, as an estimated 50% of filers may be affected. So far, the Canada Revenue Agency (CRA) has confirmed that if legislation passes, they will be able to amend T2 returns for those who included the rebate in their 2024 tax returns.
The government has committed to returning the remaining $623 million in rebates this year, but no timeline has been provided. CFIB is actively pushing for details.
We’re urging government to prioritize the following:
- Return the remaining $600 million in 2024-25 carbon tax rebates to small businesses (pending legislation).
- Pass legislation to guarantee that carbon rebates are tax-free.
- Extend the qualifying deadline for past rebates to December 31, 2024 (pending legislation).
- Create a rebate mechanism for businesses that held fuel inventory on April 1, 2025. It’s unfair that government can reclaim carbon tax using existing forms, but businesses can’t recover what they already paid.
On March 14, 2025, the government scrapped the tax through an administrative procedure, not a legislative one. CFIB is urging Parliament to immediately formalize this change through legislation. On June 30, 2025, the Minister of Finance confirmed that legislation will be introduced in the fall.
FAQ: Canada Carbon Rebate for Small Businesses
Who is eligible for the carbon rebate?
To qualify, your business must meet all the following criteria for the tax year ending in 2023:
- Be a Canadian-controlled private corporation (CCPC) for the entire 2023 tax year
- Have filed your 2023 tax return no later than December 31, 2024
- Have between one and 499 employees in a designated province* during the calendar year in which the fuel charge year begins
*Designated provinces are those where the federal fuel charge applies: Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador.
For more details, see CRA’s Canada Carbon Rebate for Small Business webpage.
How do I apply for the carbon rebate?
No need to apply. The Canada Revenue Agency (CRA) will calculate and automatically send the “Canada Carbon Rebate” to eligible businesses. If you receive the Carbon Rebate, you will receive a notice.
Am I still eligible for the carbon rebate if I file my 2023 taxes between July 15 and December 31, 2024?
Yes. On June 30, 2025, the federal government confirmed that businesses that file during this period will qualify for a carbon tax rebate covering the 2019–2020 to 2023–2024 fuel charge years. The payment will be made once legislation is passed. CFIB is seeking clarity on when and how funds will be issued.
Is my carbon rebate taxable?
No. On June 30, 2025, the federal government confirmed that it will introduce legislation to ensure that all past and future Canada Carbon Rebates for Small Businesses are tax free.
CFIB is still seeking clarification from the federal government on how businesses that have already paid taxes on the rebate will receive it back. We will update members as soon as the government provides instructions.
I have already filed my 2024 taxes and reported the carbon rebate as income. How do I get a refund?
CFIB is actively seeking clarification from the federal government on the process for businesses that have already filed and paid tax on their rebate. Approximately 50% of eligible small businesses may be affected. So far, the Canada Revenue Agency (CRA) has confirmed that if legislation passes, they will be able to process amended T2 returns. We will update members as soon as the government provides instructions.
I have not filed my 2024 taxes yet. Do I need to report the small business carbon rebate as income?
No. If your business has not yet filed its 2024 corporate income tax return, you can choose to not include the rebate in your income when filing your 2024 taxes to get it tax-free. However, you could be reassessed, with interest, if the legislation does not pass in the fall.
Are carbon rebates still being sent out?
Yes. One final round of rebates, estimated at $623 million, is still to be issued. The government has committed to distributing this amount in 2025, but no exact timeline has been announced. CFIB is pushing for clear details on when the funds will be released.
Some businesses may be experiencing delays in processing their rebates. See below.
Why haven’t I received my carbon rebate? What can I do?
We are hearing that some businesses have not received their carbon rebate. CRA has shared this may be because the business is either ineligible or their rebate is delayed. If you are still waiting on your rebate, please follow the below steps:
- Ensure you meet all eligibility requirements and have supporting documents
- Check if any of these situations apply to you:
- You were not a CCPC at all times during the 2023 tax year
- Your 2023 corporation income tax return was filed after July 15, 2024
- Your 2023 corporation income tax return was your final tax return as part of a dissolution
- Your payment was applied to an existing debt
- Your 2023 corporation income tax return is still being assessed
- Your rebate determination is under review
- Your business information with CRA is not up to date
- Your business did not pass the verification process to detect and prevent suspicious and/or fraudulent activity
- Contact the Canada Revenue Agency
- Call CFIB’s Business Advisors at 1-833-568-2342 for support
Need help or have more questions?
Speak with a CFIB Business advisor at 1-833-568-2342. We can help you navigate the CRA’s Canada Carbon Rebate for Small Business webpage, understand the new announcements, and work with our contacts at CRA to help clarify your situation.
What is the carbon tax and how does it affect my business?
The federal carbon tax was introduced in 2019 to put a price on carbon pollution. CFIB estimated that small businesses pay about 40% of the carbon tax, although they are only eligible for 5% (previously 9%) in rebates. The tax undoubtedly contributed to the rising cost of doing business in Canada, and at great expense to small business owners. The government has moved to eliminate it as of April 1st, 2025.
Everything you need to know about the carbon tax rebates
On October 1, 2024, the federal government announced that it will return $2.5 billion in carbon tax rebates to small businesses by December 2024. This applies to businesses that filed their 2023 year-end tax return by the July 15, 2024, deadline.
Rebates are based on the number of T4s issued by an employer, including those issued to the business owner, their family, part-time, and seasonal workers, as well as for positions that turn over.
On November 6, CFIB sent a letter to Minister Freeland voicing our strong opposition to the rebate being taxed as business income. Since then, she has confirmed several times that the rebates will be tax-free – all thanks to CFIB! However, the CRA maintains that it will continue to collect tax on rebates until legislation is passed that confirms this change. On March 14, 2025, the Liberal government scrapped the federal carbon tax for consumers, effective April 1, 2025.
On June 30, 2025, Minister Champagne confirmed that the government will introduce legislation to ensure rebates are tax-free, including to businesses who file their taxes on or before December 31, 2024! He also confirmed the extension to businesses that filed their taxes by December 31, 2024. Legislation enacting this change still needs Royal Assent. CFIB is actively urging government to make this a top priority in the fall. Add your voice to the call!
Carbon Tax Rebate Calculator
Your Estimated Rebate*
Data Source: Canada.ca, 2024| 5 employees | 10 employees | 25 employees | 50 employees | 499 employees | |
|---|---|---|---|---|---|
| Alberta | $2,955 | $5,910 | $14,775 | $29,550 | $294,909 |
| Saskatchewan | $5,780 | $11,560 | $28,900 | $57,800 | $576,844 |
| Manitoba | $2,405 | $4,810 | $12,025 | $24,050 | $240,019 |
| Ontario | $2,005 | $4,010 | $10,025 | $20,050 | $200,099 |
| New Brunswick | $435 | $870 | $2,175 | $4,350 | $43,413 |
| Nova Scotia | $595 | $1,190 | $2,975 | $5,950 | $59,381 |
| Prince Edward Island | $410 | $820 | $2,050 | $4,100 | $40,918 |
| Newfoundland and Labrador | $895 | $1,790 | $4,475 | $8,950 | $89,321 |
CFIB worked hard to ensure government delivered on this promise after 5 years of delays. This happened after months of relentless advocacy, including delivering over 18,500 signed petitions from business owners across the country and garnering the support of the affected provinces.
WATCH: CFIB President, Dan Kelly, call for an immediate fix to the unfair federal carbon tax.
See the work CFIB has done so far to help your business with the carbon tax:
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Dan Kelly shares a brief recap of the budget and what it means for SMEs across Canada.
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Dan Kelly calling for an immediate fix to the federal carbon tax.
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