CFIB secures tax-free status for Canada’s carbon rebate, promising relief for small business owners
Deputy Prime Minister and Finance Minister Chrystia Freeland announced that the Canada carbon rebate for small businesses will be tax-free.
This statement addresses recent concerns raised by the Canadian Federation of Independent Business (CFIB), as reported by The Canadian Press.
Freeland clarified the tax status of the rebate late Tuesday in a statement posted on X.
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.
Her announcement followed a call with CFIB President and CEO Dan Kelly, who confirmed that Freeland provided “assurance” the rebate would be tax-free.
This clarification came after conflicting information: while the Canada Revenue Agency (CRA) initially informed the CFIB that the rebate would be tax-free, the Finance Department later indicated it might be taxable.
Kelly, in a letter dated November 6 to Freeland, argued that the rebate is meant as a return for taxes paid by small businesses, not a “gift” from general revenue.
Comparing it to an income tax return, Kelly remarked that taxing the rebate would be “akin to levying income taxes on one’s income tax return.”
Kelly also stated that 83 percent of the CFIB's 97,000 members favour repealing the carbon price altogether.
Freeland’s office remained silent on requests for comment Monday and Tuesday. However, a spokesperson eventually sent a link to the minister's social media post on Tuesday night, offering clarity on the rebate’s tax-free status.
The CRA indicated it would release more information mid-week.
The Canada carbon rebate for small businesses, introduced in the federal budget this year, allocates $2.5bn in carbon price revenue to roughly 600,000 small and medium-sized businesses.
While acknowledging Freeland’s efforts in establishing the rebate, Kelly emphasized that, despite the rebate, the majority of CFIB members remain opposed to the carbon tax.
He added that the rebate could help the government fulfil its long-standing promise of revenue neutrality to small firms.
