Tax treatment of the rebate

Under the current legislation, the Canada Carbon Rebate for Small Businesses is considered assistance received from a government and is subject to taxation.

On June 30, 2025, the Government of Canada re-confirmed that the rebate will be non-taxable for all fuel charge years. To support this, draft legislation has also been published, which is expected to be introduced in Parliament in the fall. Businesses can choose not to include the rebate in taxable income when filing their T2 Corporation Income Tax Return for the year in which it was received. However, they could be reassessed, with interest, in the event that legislation is not enacted.

If enacted, the CRA will have the authority to process amended T2 returns for those who have already included the rebate in their taxable income for the 2024 taxation year. Further guidance will be provided at that time.