Canada Carbon Rebate for Small Businesses

Tax Topics
21

I would assume that was never the intent.

However, is there anything that prevents this ??

22

Looking at ITA 89(1), it is a no go…

23

Thanks. I’ll go with GIFI 8230, then enter the same amount in S1 area 705 with the carbon rebate comment.

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24

Imagine being taxed at the pump, getting a portion of that money back, and then being taxed on that portion. Canada in a nutshell.

25

In my email today from CRA in case others haven’t received this message:

" Reporting the Canada Carbon Rebate for Small Businesses on your T2 corporation income tax return

Under the current legislation, the Canada Carbon Rebate for Small Businesses is considered assistance received from a government and is subject to taxation. As such, it must be included in taxable income when filing your T2 corporation income tax return for the year in which the rebate was received.

The Government of Canada has proposed that the rebate be tax-free. However, a legislative amendment is required to implement this proposal.

If a legislative amendment is enacted, the CRA will have the authority to process amended T2 corporation income tax returns. Further guidance will be provided at that time.

Visit [Canada Carbon Rebate for Small Businesses ](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/business-tax-credits/canada-carbon-rebate-small-businesses.html)to stay informed."

The CFIB address this in a post on their website dated Feb. 10, 2025:
Canada Revenue Agency to tax the $2.5 billion small business carbon tax rebate despite decision by the Department of Finance .

So for those who haven’t filed their corporate returns yet, seems we can’t claim a reduction for this credit on Schedule 1 as discussed earlier on this thread. We must claim it as income now, and file for an adjustment much later after the gov’t tables a legislative amendment.

26

You are correct @kozakworld

Apparently Chrystia Freeland’s “tweets” are not considered legislation.

https://x.com/cafreeland/status/1856506100217954750?lang=en

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27

CFIB held a webinar today where this was discussed in depth. CFIB president Dan Kelly is extremely displeased with CRA’s determination - says it’s like taxing a tax refund. CFIB will continue to lobby for it to be non-taxable, but nothing will happen until parliament resumes. Further, Dan says that CFIB has been getting overwhelming responses from business owners to cancel the whole carbon tax system. Apparently Pollievere is considering that already, but Dan warns that whatever they replace it with might be just as bad.

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