The federal government has announced that the Canada Carbon Rebate (CCR) for Small Businesses will be non-taxable for eligible Canadian-controlled private corporations (CCPCs) for the 2019–2020 to 2023–2024 fuel charge years, as will the final payment for the 2024-2025 fuel charge year.

On June 30, 2025, draft legislation was released confirming this change, with Royal Assent anticipated in Fall 2025. The Canada Revenue Agency (CRA) has acknowledged the upcoming amendment, but recommends caution in the interim.

⚠️ What This Means for Your Corporate Tax Return

Under current law, CCR payments are considered taxable government assistance and are included in income. However, once the legislation passes:

• CCR will be tax-free retroactively.

• CRA will allow corporations to amend prior returns to remove CCR from taxable income.

• Late filing deadlines for certain CCR entitlements have also been extended to December 31, 2024.

🧾 Your Filing Options

Until legislation is passed, corporations have two options when preparing their T2 corporate tax returns:

Option 1 – Include CCR as Income (Conservative Approach)

• Consistent with existing legislation.

• Avoids risk of reassessment or interest if legislation is delayed or not passed.

• Return can be amended later to remove CCR if/when law is enacted.

Option 2 – Exclude CCR from Income (Based on Draft Legislation)

• May reflect upcoming law change.

• CRA has indicated businesses may choose this route.

• However, reassessment with interest may occur if legislation does not receive Royal Assent.

💬 Our Role

As your advisors, we will support either approach based on your risk tolerance and corporate profile. We encourage you to consider the potential for reassessment and interest, and to consult with us before finalizing your return.

📞 Have questions?

Please contact our office if you would like to review the implications for your T2 filing, or if you would like us to prepare an amendment after the law is finalized.