At the Canada Revenue Agency (CRA), we understand that managing the financial aspects of your business can be complex, especially when it comes to navigating tax requirements. In light of this, we want to share some important information regarding the Canada Carbon Rebate for Small Businesses and how it impacts your T2 corporation income tax return.
Under the current legislation, the Canada Carbon Rebate for Small Businesses is considered assistance received from a government and is subject to taxation. This means it must be included in your taxable income when filing your T2 corporation income tax return for the year in which you received the rebate.
The rebate description should be provided on line 605 and the rebate amount reported on line 295 of the Schedule 1 of your T2 return.
The Government of Canada has proposed that the rebate be tax-free. However, a legislative amendment is required to implement this proposal.
If a legislative amendment is enacted, the CRA will have the authority to process amended T2 corporation income tax returns. We will provide further guidance at that time.
Resources to help you with tax filings are available on the CRA website. Stay informed by monitoring updates on Canada Carbon Rebate for Small Businesses and reach out to us directly at 1-800-959-5525 if you have questions.
