Written by William Archibald, CPA, Kenway Mack Slusarchuk Stewart LLP
In Budget 2024 the federal government announced an accelerated and automatic process to directly return over $2.5 billion to small and medium sized businesses in the provinces where the federal fuel charge applies through the new Canada Carbon Rebate for Small Businesses. The initial announcements did not include the amount of the rebate but on October 1, 2024, the amount of the rebate was released.
The Canada Carbon Rebate for Small Businesses is an amount paid to help offset the costs associated with federal carbon pollution pricing. The rebate is currently available to small businesses that have an employee in a designated province.
To be eligible for the Canada Carbon Rebate for Small Businesses, the following criteria must be meet:
How Much Can Small Businesses Expect to Receive?
The tax credit amount for the Canada Carbon Rebate for Small Businesses depends on which province the small business has employees and how many employees it has during each year. Any person who receives a T4 is considered a person employed for this purpose. See the table below on what the specified payment rates are and an example on what is expected for years 2019 to 2023.
Specified Payment Rates Per Employee for the Canada Carbon Rebate for Small Businesses, 2019-20 to 2023-24
2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 | |
Alberta* | n/a | $147 | $123 | $140 | $181 |
Saskatchewan | $110 | $271 | $244 | $298 | $233 |
Manitoba | $48 | $99 | $77 | $89 | $168 |
Ontario | $26 | $68 | $75 | $86 | $146 |
New Brunswick* | n/a | n/a | n/a | n/a | $87 |
Nova Scotia* | n/a | n/a | n/a | n/a | $119 |
Prince Edward Island* | n/a | n/a | n/a | n/a | $82 |
Newfoundland and Labrador* | n/a | n/a | n/a | n/a | $179 |
* As the federal fuel charge only came into effect as of January 1, 2020 in Alberta, and as of July 1, 2023 in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, small businesses in these provinces will receive payments for proceeds collected after those respective dates.
The price on pollution is revenue neutral for the federal government; all proceeds are returned in the jurisdiction where they were collected. Payment amounts vary between jurisdictions due to differences in the amount of fuel charge proceeds collected in that province and the number of employees that eligible corporations that will receive payments had in that province.
Example Payment Amounts for Businesses, by Number of Employees from 2019 to 2023
10 employees | 25 employees | 50 employees | 100 employees | 499 employees | |
Alberta* | $5,910 | $14,775 | $29,550 | $59,100 | $294,909 |
Saskatchewan | $11,560 | $28,900 | $57,800 | $115,600 | $576,844 |
Manitoba | $4,810 | $12,025 | $24,050 | $48,100 | $240,019 |
Ontario | $4,010 | $10,025 | $20,050 | $40,100 | $200,099 |
New Brunswick* | $870 | $2,175 | $4,350 | $8,700 | $43,413 |
Nova Scotia* | $1,190 | $2,975 | $5,950 | $11,900 | $59,381 |
Prince Edward Island* | $820 | $2,050 | $4,100 | $8,200 | $40,918 |
Newfoundland and Labrador* | $1,790 | $4,475 | $8,950 | $17,900 | $89,321 |
* As the federal fuel charge only came into effect as of January 1, 2020 in Alberta, and as of July 1, 2023 in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, small businesses in these provinces will receive payments for proceeds assessed after those respective dates.
Corporations that filed their tax return for 2023 by July 15, 2024, will receive their Canada Carbon Rebate for Small Businesses by the end of this year. There is no action required for eligible businesses to receive the rebate.
Corporations that have filed their tax return for 2023 by July 15, 2024 are expected to receive their payment by:
Corporations that have filed their tax return for 2023 after July 15, 2024, and on or before December 31, 2024, would still be eligible for a payment; however, the legislation enacting these changes requires Royal Assent before any payments will be issued to corporations filing after July 15.
To ensure that future payments are received, eligible corporations should file their tax returns for the 2024 and subsequent taxation years before July 15 of the following year.
These payments are to be treated as taxable income in the taxation year in which the assistance is received as it is considered government assistance.
Conclusion
Small businesses that are Canadian controlled private corporations that filed their 2023 income tax return before July 15, 2024 and have employees in the designated provinces should receive a payment from the CRA based on how many employees they have for years 2019 to 2023. If it filed its 2023 income tax return after July 15, 2024, it may still be eligible for a payment if the legislation enacting these changes receives Royal Assent.
If you are unsure if your business is eligible for the Canada Carbon Rebate for Small Businesses, please contact your KMSS advisor to discuss.
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