I included Canada Carbon Rebate in income on prior-year T2 and paid tax on it. Now the rebate is non‑taxable but the amount looks too small to justify amending.
My thought:
What’s everyone else doing - amending or reversing in current year?
I have considered doing what you have suggested, it has not come up yet for me.
CRA sent me the Carbon rebate lat Dec. Check CRA online and/or your bank account.
Helga - it’s not about the money…it’s that it was ultimately determined to be NON-TAXABLE and many of us reported it (as we were told to at the time) on the T2 as TAXABLE. Now clients have paid tax on that money…no matter how small.
Personal opinion: send an amendment and make them fix it. It was their problem to begin with and it’s their problem to fix. The time involved is relatively minimal.
Deduct it on this year, is legit as it only received Royal Assent now.
Bert - wasn’t the effect retroactive to the year of receipt?
(To be fair, in most cases it won’t make a shred of difference as between the years chosen…..LOL)
I seem to recall hearing that “someone” (i.e. CRA or Dep of Finance) was promising to provide a streamlined method for correcting these. I haven’t yet heard what that is. Maybe Bert has? Claiming it on the current year T2 would be nice…
Learned long time ago not to rely on CRA to do this for you, especially as they would have no idea which ones did or did not exclude it from taxable income, as there is no designated GIFI code.
And in today’s CRA, requesting that volume of adjustments would not only be very time consuming, but would be a nightmare to respond to CRA ‘verification’.. May as well ask for an audit of all those clients.
Not expecting CRA to “do it for us”, but was hoping they would tell us how they want US to do it.
CRA sent me the Carbon rebate lat Dec. Check CRA online and/or your bank account.
On my 2024 return, I paid tax on the Carbon Tax rebate. I did not ask for the refund. It was automatically sent.
This was posted yesterday on the CRA site: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/business-tax-credits/canada-carbon-rebate-small-businesses.html
On March 26, 2026, the Government of Canada passed legislation that makes the Canada Carbon Rebate for Small Businesses non-taxable for all fuel charge years. The CRA is now reviewing the T2 Corporation Income Tax Returns for businesses that may have included the rebate in their taxable income for the year it was received.
If there is clear indication the rebate amount was reported at line 295 of the Schedule 1, we will complete an adjustment to remove the amount from the calculation of your taxable income. No action will be required on your part.
If there is no clear indication the rebate was included in taxable income, we will be requesting additional information in order to determine if an adjustment to your T2 return is needed.
EDIT: line 295 of Schedule 1 is “Unrealized losses, GIFI 9980”. I expect most included this as “Other income” on the S125 so I don’t know how CRA will know how to adjust this automatically.
I wonder if requesting an amendment might be the best way to handle this, as who knows how long it will take CRA to get to all of these returns. Or, will that just cause more confusion with the left hand not knowing what the right hand is doing? Thoughts?
For prior year, the amount was included in income in the accounting records which flowed to line 8242 of S125.
On S1, it was added back on line 295 and then deducted on line 395 - netted to zero on S1 but remained included in income overall.
Based on @DebB post CRA intends to address. I’ll give them the opportunity to correct it first. If they don’t, I’ll deduct next year.
Amounts are not material - as long as I can reconcile the transaction I have no issue deducting it next year if CRA does not make the adjustment.