Beginning in 2019, the federal government began a carbon tax rebate program for small businesses to offset the costs associated with carbon pollution pricing.

Earlier this year, in the federal budget, the government announced it will reimburse small businesses a portion of the carbon rebate.

Who qualifies for the rebate?

Any small business registered as a Canadian-controlled private corporation (CCPC), which has between 1 and 499 employees qualifies for the rebate. The number of employees is determined by the number of T4 slips issued. There is no distinction made between full-time, part-time, or seasonal employees. Sole proprietorship and partnerships are not eligible.

When can the rebate be expected?

Small businesses that filed their 2023 corporate tax returns by July 15, 2024, can expect to receive their carbon rebate in December 2024. Any small business that filed their 2023 corporate tax returns after July 15, 2024, are still eligible for payment, however the legislation enacting these changes still requires Royal Assent. No timing has been given on the rebate for these businesses.

There is no need to do anything, the rebate will be automatically issued. Once payments are ready, they will be deposited directly into the bank accounts of businesses that are set up for direct deposit with the CRA. If your business isn’t set up for direct deposit, the rebate will be issued by cheque.

What is the amount of the rebate?

The amount to be paid depends on the number of employees, or more specifically the amount of T4 slips issued, and the provincial location of the small business.

Specified Payment Rates Per Employee for the Canada Carbon Rebate for Small Businesses, 2019-20 to 2023-24

Government of Canada, “Canada Carbon Rebate for Small Businesses Payment Amounts, 2019-20 to 2023-24,” last modified, October 2024, https://www.canada.ca/en/department-finance/news/2024/10/canada-carbon-rebate-for-small-businesses-payment-amounts-2019-20-to-2023-24.html.