Countdown to federal carbon tax: Small businesses still have many unanswered questions

CFIB urges government to cancel the tax and work with provinces on customized approaches to climate change

Toronto, March 27, 2019 – With less than a week until the federal carbon tax is imposed in Saskatchewan, Manitoba, Ontario and New Brunswick, small business owners still have more questions than answers. The Canadian Federation of Independent Business (CFIB) is calling on the government to abandon the implementation of the carbon tax and work with the provinces to reduce emissions without negatively affecting small businesses.

“The federal carbon backstop plan is already turning into a red tape nightmare for small firms,” said CFIB president Dan Kelly. “We have approached the government for clarification on the questions we have been fielding from small business owners across the country, but we have been left with even more questions. Small business owners already overwhelmingly oppose the carbon backstop, and this is just adding to their frustration.”

In a recent CFIB survey, 87 per cent of small businesses in the four affected provinces opposed the federal carbon tax plan. Small businesses, along with municipalities, universities, school boards and hospitals, will contribute almost 50 per cent of the carbon tax revenues, but get just 7 per cent back in the form of grants and rebates, while consumers will receive 90 per cent of the payments. In addition, four out of five surveyed businesses said they would be able to pass on less than a quarter of the new costs to consumers.

“While the financial support set aside for small business represents only a fraction of their additional costs, what makes it even worse is that there are no details on what this $1.5 billion fund will look like,” added Kelly. “How can small firms apply for these funds, what kinds of projects will qualify, will they have to pay for the costs up front or wait for reimbursement? It’s hard for business owners to feel supported when these basic details are lacking.”

The federal plan also includes a confusing slew of rules on registrations and exemptions. Businesses in transportation, fuel distributors and manufacturers who use petroleum products have to register with the Canada Revenue Agency (CRA) by April 1 or face a $2,000 fine. Farmers and fishers are exempt from paying the tax on certain fuels, and greenhouse operators have an 80 per cent exemption. All these business owners must fill out an exemption certificate to hand in to their distributor (who must also be registered in order to pass down the exemption). 

Some of the top questions business owners have been asking CFIB include:

  • Which “eligible farming activities” are covered by the farming exemption?
  • What types of businesses are required to register by April 1 and for which businesses is registration optional?
  • Are distributors required to itemize the fuel charge on their receipts? And, what other records are they required to keep?
  • How will businesses who obtain exemptions be required to prove to the CRA how they used the fuel in case of an audit?

In light of the confusion surrounding the new tax, CFIB is asking the federal government to provide a transition period and extensions to businesses that don’t register by April 1 if it decides to proceed with the carbon backstop plan, instead of punishing them with heavy fines.

“The federal carbon tax is patently unfair to small firms, who are not only being asked to absorb the majority of the new costs, but also subsidize larger rebates for households,” concluded Kelly. “Now, they are also facing countless hours untangling a new mess of rules with precious few days left before the tax comes into effect. Small businesses deserve better than this.”

For media enquiries or interviews, please contact:
Milena Stanoeva, CFIB

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 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