Canada’s Small Business Carbon Rebate: A Lifeline for Entrepreneurs
Small businesses are the backbone of Canada’s economy. But with increasing environmental regulations and carbon pricing, many entrepreneurs are facing higher operational costs. To help with that, the Canadian government introduced Canada’s Small Business Carbon Rebate . This program takes a portion of the carbon pricing revenue and gives it back to eligible businesses to help offset expenses and encourage sustainability.
What is the Carbon Rebate?
The Carbon Rebate Program is to compensate small businesses for the extra costs of the federal fuel charge. It ensures businesses aren’t unfairly punished by carbon pricing policies while promoting energy efficiency. By giving the funds back to businesses, the program supports Canada’s overall climate action without strangling the economy.
Who is Eligible?
To be eligible your business must:
- Be a Canadian-Controlled Private Corporation (CCPC): Only CCPCs are eligible.
- Have 1–499 Employees: This is for small to medium sized businesses.
- File Corporate Income Tax Return (T2) on Time: You must file your previous year’s tax return by the deadline to be eligible.
The good news is there is no application process. The CRA will automatically determine eligibility based on your tax filings so you won’t miss out due to administrative hurdles.
How Much Can Your Business Receive From Carbon Rebate Program?
Rebates vary by province. Here is the 2020–2021 fuel charge year rebate:
| Province | Rebate per Employee |
| Alberta | $147 |
| Saskatchewan | $271 |
| Manitoba | $99 |
| Ontario | $68 |
These amounts are adjusted annually based on federal carbon pricing and provincial allocations. You may also see additional savings from operational efficiencies if you reduce your carbon footprint.
When Will I Get Paid?
Eligible businesses will receive payments as follows:
- Filing 2023 T2 by July 15, 2024: Payments will be issued in December 2024.
- Late Filers (July 16–December 31, 2024): Payments will be delayed until next cycle.
How Will I Get Paid?
The CRA has two payment options:
- Direct Deposit: If you’re set up for electronic payments, funds will be deposited into your account.
- Mailed Cheque: If you’re not set up for direct deposit, cheques will be mailed.
Is the Rebate Taxable?
Right now the carbon rebate is considered taxable income. So you’ll need to report it on your corporate tax return. But the government has proposed making the rebate tax-free. Watch for updates from the CRA for changes.
Get the Most Out of the Carbon Rebate
Here’s how:
- Invest in Energy-Efficient Solutions
Switch to LED lighting, energy-efficient appliances or renewable energy and reduce your carbon footprint and costs.
- Use Government Incentives
Check out other grants and tax credits for businesses that go green.
- Go Green
Transition to electric vehicles, remote work or sustainable packaging to reduce emissions.
- Track Energy Use
Do energy audits and use tracking tools to find inefficiencies and optimize resources.
FAQs
Q1. Do I Need to Apply for the Carbon Rebate?
No. Eligibility is automatic based on your corporate tax filings.
Q2. What if I Miss the Deadline?
If you file after July 15 but before Dec 31, 2024 you’ll still qualify but will get your rebate later.
Q3. Non-Profit or Sole Proprietors?
Unfortunately only Canadian-Controlled Private Corporations (CCPCs) are eligible.
Q4. Will the Rebate Increase?
Yes. As carbon pricing increases annually so will the rebate.
Q5. Where Can I Check My Rebate Status?
You can check your status through your CRA My Business Account or contact the CRA.