Carbon rebate for small businesses will be tax-free: Freeland
In a statement posted to X late Tuesday, Freeland clarified the parameters of the program after an advocacy group for small business raised concerns that the rebate would be a taxable benefit.
Deputy Prime Minister and Finance Minister Chrystia Freeland has confirmed that the Canada carbon rebate for small businesses will be tax-free.
In a statement posted on X late Tuesday, Freeland provided clarification on the details of the program after concerns were raised by a small business advocacy group, which feared the rebate would be treated as a taxable benefit.
The Canada Carbon Rebate is delivering $2.5 billion directly to small businesses.
— Chrystia Freeland (@cafreeland) November 13, 2024
This rebate will be tax free.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), shared on X that he had received a call from Freeland, who assured him that the rebate would indeed be tax-free.
Earlier, in a letter to Freeland dated November 6, the CFIB had stated that it was initially informed by the Canada Revenue Agency (CRA) that the rebate would be tax-free. However, the group was later told by the Finance Department that it might actually be taxable.
The CRA had indicated it would provide clarification later in the week when contacted for comment. Freeland’s office did not respond to queries on Monday and Tuesday, but shortly after her social media post, a spokesperson provided a link to it.
In his letter, Kelly emphasized that the rebate is intended to refund taxes paid by small businesses, not a "gift" from general revenue. He compared it to levying income tax on one’s tax return, saying, "This would be akin to levying income taxes on one’s income tax return."
Kelly also highlighted that 83 percent of CFIB's 97,000 members want the carbon price to be repealed.
The Canada carbon rebate for small businesses was introduced as part of the federal budget this year, where $2.5 billion in carbon price revenue will be refunded to approximately 600,000 small and medium-sized businesses.
While thanking Freeland for ensuring the rebate’s implementation, Kelly acknowledged that it may not change his members' stance on the carbon tax but expressed that the rebate would help fulfill the government’s long-standing promise to small businesses and restore some level of revenue neutrality.
