Ottawa/CMEDIA: A draft legislation reportedly has been issued by François-Philippe Champagne, Canada’s Minister of Finance and National Revenue to ensure that all Canada Carbon Rebates for Small Businesses are provided tax-free.
The 2019-20 to 2023-24 fuel charge years payments received by corporations would be excluded for income for tax purposes, and the final payment to be made under the Canada Carbon Rebate for Small Businesses (i.e., in respect of the 2024-25 fuel charge year) will also be tax-free.
The government will introduce legislation in Parliament to implement these changes in the fall.
Once the legislation receives Royal Assent, the Canada Revenue Agency (CRA) will be authorized to process amended T2 corporation income tax returns for those who have already included the rebate in their taxable income, ensuring the rebate is processed as tax-free (i.e., not included in the taxable income reported in the T2).
Further guidance will be provided by the CRA at that time.
Eligible businesses that filed their 2023 tax return after July 15, 2024, and on or before December 31, 2024, the government confirmed, will also be eligible to receive tax-free payments in respect of the 2019-20 to 2023-24 fuel charge years, once the legislation receives Royal Assent.
All Eligible businesses that file their 2024 income tax return by July 15, 2025, will be eligible to receive a tax-free payment in respect of the 2024-25 fuel charge year.
“With the elimination of the federal fuel charge, we will be making our final Canada Carbon Rebate for Small Businesses payments, and as with those for previous years, they will be tax-free rebates. With the consumer fuel charge gone, we are able to refocus federal carbon pollution pricing standards on ensuring that carbon pricing systems are in place across Canada on a broad range of greenhouse gas emissions from industry. In doing so, we will ensure a system that is fair and effective,” said Champagne.
