Business advocacy group says Ottawa shouldn't tax carbon rebates

A small business advocacy group is re-upping calls to eliminate the carbon tax, after it says members learned the Canada carbon rebate for small businesses is a taxable benefit.

A small business advocacy group is re-upping calls to eliminate the carbon tax, after it says members learned the Canada carbon rebate for small businesses is a taxable benefit.

In a letter to Finance Minister Chrystia Freeland last week, the Canadian Federation of Independent Business called the move "deeply unfair to Canada’s small firms."

"This is a rebate of taxes paid by small firms, not a gift to small firms from general revenue," wrote the federation's president and CEO, Dan Kelly. "This would be akin to levying income taxes on one’s income tax return."

Kelly also said 83 per cent of the group's 97,000 members want the carbon tax to be repealed.

The Canada carbon rebate for small businesses was a measure introduced in this year's federal budget, in which $2.5 billion of carbon price revenue would be paid back to some 600,000 small- and medium-sized businesses.

In a press release Tuesday, CFIB also said the Canada Revenue Agency previously issued an interpretation that the benefit would not be taxable, but the Finance Department had a different interpretation.

The Canadian Press contacted both the CRA and Freeland's office for comment. Freeland's office did not respond while the CRA said it would have information available later this week.