Breaking News: Canada Revenue Agency to tax the $2.5 billion small business carbon tax rebate despite decision by the Department of Finance.
Read CFIBs latest statement here

The carbon tax is gone, but several questions remain!   

On March 14, 2025, the Liberal government scrapped the federal carbon tax for consumers, effective April 1, 2025. While CFIB welcomes this long-awaited decision, small businesses still need clarity on several  outstanding issues. 

We’re urging all parties to prioritize the following: 

  • Return the remaining $600 million in 2024-25 carbon tax rebates to small businesses (as promised).
  • Pass legislation to guarantee that carbon rebates are tax-free (as promised).
  • Extend the qualifying deadline for past rebates to December 31, 2024 (as promised).
  • 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.

The government scrapped the tax through an administrative procedure, not a legislative one. After the federal election, we are urging Parliament to immediately formalize this change through legislation. 


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.

The government is also proposing to extend the filing deadline to qualify to December 31, 2024 (previously July 15, 2024) for those who have not yet filed their 2023 year-end corporate tax return. Legislation enacting this change still needs Royal Assent.

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. CFIB is actively urging government to make this a top priority. Add your voice to the call!

Latest announcement: Tax-free carbon tax rebates are being deposited to eligible business owners as of November 25, 2024. If you’re not registered for direct deposit with the CRA, your cheques are in the mail and will be delivered when possible.

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.

The government is also proposing to extend the filing deadline to qualify to December 31, 2024 (previously July 15, 2024) for those who have not yet filed their 2023 year-end corporate tax return. Legislation enacting this change still needs Royal Assent.

On November 6, CFIB sent a letter to Minister Freeland voicing our strong opposition to the rebate being taxed as business income. On November 12, she confirmed that the rebate will be tax free – all thanks to CFIB!

Rebates will be 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.

Carbon Tax Rebate Calculator

Your Estimated Rebate*

Data Source: Canada.ca, 2024
Note: The federal fuel charge came into effect as of January 1, 2020, in Alberta, and as of July 1, 2023, in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Small businesses in these provinces will receive payments for proceeds assessed after those respective dates.
 
*Calculations are an estimate based on best available data. Actual rebates may differ.  
 
Carbon tax rebate amount by number of employees, from 2019 to 2023
  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.

 

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.

WATCH: CFIB President, Dan Kelly, call for an immediate fix to the unfair federal carbon tax.

DK-Carbon-Tax-Thum-1 play-button

See the work CFIB has done so far to help your business with the carbon tax:

Video

Dan Kelly shares a brief recap of the budget and what it means for SMEs across Canada.

Video

Dan Kelly calling for an immediate fix to the federal carbon tax.