Urgent carbon tax, capital gains questions remain outstanding in advance of a potential election call

The Canadian Federation of Independent Business (CFIB) welcomes Ottawa’s decision to scrap the carbon tax but is concerned about some important outstanding carbon, capital and alcohol tax matters.

“Small businesses will be pleased to see the end of the federal carbon tax. Given how long small business owners have been getting the runaround from the federal government, it’s not surprising that 83% of them wanted the entire system gone,” said Dan Kelly, CFIB president. “But this move does not address all of the outstanding carbon tax business. Small firms need more certainty, especially as we gear up for a federal election and the ongoing trade war. They need clarity on the tax status of their carbon tax rebates heading into tax season. Despite repeated commitments from the Minister of Finance to ensure they are tax free, the CRA maintains that with no official order, the $2.5 billion small business rebate delivered last December remain taxable.”

While the federal government has announced the final round of carbon rebate payments for individuals on April 22, 2025, there is no word on the final year of the carbon rebate for small businesses which is expected to return over $500 million to small firms this year. In addition, many small firms are waiting on legislation which was to extend the deadline to qualify for the rebate to December 31, 2024.

As small firms are dealing with U.S.-Canada and Chinese tariffs, CFIB urges government and all parties to find a way to fix the outstanding tax matters:

• Return over $500 million in 2024-25 carbon tax rebates to small business (as promised)

• Pass legislation to prevent over $3 billion in small business carbon rebates from being taxed (as promised)

• Extend the qualifying deadline for past rebates to December 31, 2024 (as promised)

• Scrap the automatic April 1 increase in the alcohol excise tax

• Pass proposed legislation to increase the lifetime capital gains exemption threshold to $1.25M and legislate the Canadian Entrepreneurs’ Incentive (as promised).

“Leaving these tax issues outstanding is deeply unfair to Canada’s small businesses. Right now, Canadian entrepreneurs don’t even know if the rebate cheques they received in December are taxable, nor whether the 2024 payment will ever happen. Not only is this ridiculous, but it’s yet another tax uncertainty at a time of great economic turbulence,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. “We need government and – in advance of the election – all political parties, to make clear where things are headed.”

Small businesses can learn more about CFIB’s advocacy on carbon tax here. 

About CFIB

The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.

SOURCE Canadian Federation of Independent Business