The 2024 Federal Budget introduced the Canada Carbon Rebate for Small Businesses, which will return over $2.5 billion in proceeds from the Federal Carbon Tax to an estimated 600,000 businesses through an automated process. Here's what you need to know about how the rebate works, how amounts are calculated, and when to expect your payment.
What is the Canada Carbon Rebate for Small Businesses?
The Canada Carbon Rebate is part of the Climate Action Incentive Fund, designed to support businesses with fewer than 500 employees in provinces affected by the Federal carbon pricing system. While individuals have received Climate Action Incentive payments for years, this initiative specifically addresses the financial strain the Federal Carbon Tax places on small businesses.
How Are the Rebate Amounts Calculated in Ontario?
The rebate amount is based on the number of individuals employed by the business and the applicable rate for the qualifying year. The 2024 rebate is calculated retroactively to 2019 and includes adjustments for inflation and other factors. Businesses with fluctuating employee numbers will have their rebate calculated using annual payroll tax filings, such as T4 summaries. Moving forward, rebates will be calculated annually and will remain non-taxable.
Breakdown of the applicable Ontario rebate rates:
As an example, if you had five employees from 2019 through 2023, your business can expect to receive a rebate of $2,005 (calculated as [$26+$68+$75+$86+$146] x 5 employees).
When Will You Receive the Payment?
Eligible Canadian Controlled Private Corporations (CCPCs) will automatically receive the rebate with a notice confirming the payment. Businesses that filed their 2023 tax return by July 15, 2024, and are registered with the Canada Revenue Agency for direct deposit, are expected to receive the rebate by the end of the year. Direct deposit payments will appear as "Canada Carbon Rebate" in their account. Businesses that are not registered for direct deposit can expect to be issued cheques once the Canada Post disruption has been resolved.
How Can We Help?
If you're unsure whether you qualify for the Canada Carbon Rebate or need assistance reviewing the rebate received, please contact, your Crowe Soberman advisor.
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.
