5 minute read

Non-Taxability of Canada Carbon Rebates for Small Businesses

Published on

16 Jul 2025

On June 30, 2025, the Government of Canada announced that the Canada Carbon Rebate for Small Businesses will be non-taxable. This change applies retroactively to fuel charge years from 2019–20 to 2023–24, and also extends to the final 2024–25 payment—provided that the required return is filed by July 15, 2025. This means eligible corporations will now be able to retain 100% of their rebate without needing to include it in taxable income.

Why This Matters for Your Business

Previously, some corporations may have reported these rebates as taxable income. With this legislative change, the Canada Revenue Agency (CRA) will now allow amended corporate returns to be filed for impacted years, enabling businesses to recover any overpaid taxes and related interest.

Furthermore, businesses that file their 2024 income tax return by the July 15 deadline will be eligible to receive the final tax-free rebate for the 2024–25 fuel charge year. Those that file later in the year may still qualify for a retroactive payment, pending the final passage of legislation.

Key Deadlines & Filing Opportunities

July 15, 2025: File your 2024 T2 corporate tax return by this date to receive the last carbon rebate.

Retroactive relief: Businesses that included past rebates in income from 2019 onward can amend previous returns to claim refunds.

What You Should Do Now

Review your corporate tax returns from 2019 to 2023 to determine whether carbon rebates were reported as income.

Prepare amended returns if applicable to claim refunds and interest.

Ensure your 2024 return is filed on time to receive the final rebate.

Stay informed as further CRA guidance becomes available when the legislation is enacted.

How Senova Can Help

At Senova, we’re here to make this process easy and rewarding:

Amendments & reviews: We’ll examine your past filings, prepare necessary amendments, and help recover any overpaid tax.
Timely 2024 filing: We’ll ensure your return is submitted before the July 15 deadline.
CRA representation: Our team can liaise with the CRA on your behalf for seamless processing.
Strategic insights: We’ll help you understand how this change affects your tax planning and cash flow.
Proactive support: We’ll keep you updated on next steps and ensure you’re always a step ahead.

Bottom Line

This is a welcome win for small businesses—and a chance to claim tax-free funds that may have been unnecessarily taxed in prior years. At Senova, we’re ready to help you act quickly, minimize your tax burden, and get the most out of the Canada Carbon Rebate.

Need help determining your eligibility or preparing amended filings? Reach out to Senova today—we’re here to support your business every step of the way

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