The Canada Revenue Agency (CRA) would like to share updates about the Canada Carbon Rebate for Small Businesses that could impact your tax filings and eligibility for payments.

Tax treatment of the rebate

Under the current legislation, the rebate 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. Draft legislation has been published to support this change and is expected to be introduced in Parliament this fall.

What this means for you:

• If you haven’t yet filed: You can choose not to include the rebate in your taxable income when filing your T2 Corporation Income Tax Return for the year in which you received it. However, if the legislation does not receive Royal Assent, your return could be reassessed with interest.
• If you have already filed: If the legislation receives Royal Assent, the CRA will be able to process amended T2 returns for the 2024 taxation year for those who already included the rebate in their taxable income. We will provide further guidance at that time.

Filing deadline for the final payment

Eligible businesses need to file their 2024 tax return by July 15, 2025, in order to receive a payment for the 2024-2025 fuel charge year.

Once the Minister of Finance and National Revenue has specified the payment rates for each designated province, we will calculate and automatically issue the rebate amounts to those who are eligible.

Don’t miss out—file on time!

Filing deadline for past years

The government also confirmed that corporations that filed their 2023 tax return after July 15, 2024, and on or before December 31, 2024, will also be eligible for the retroactive payment covering fuel charge years 2019-2020 to 2023-2024. No action is required—these payments will be issued at a later date, should the legislation receive Royal Assent. We will share updates as soon as more information becomes available.

We encourage you to review these updates carefully to understand how they may apply to your business.

For more details, visit Canada Carbon Rebate for Small Businesses.