What Canada's Small Businesses Need to Know About Carbon Rebates

As climate policy shapes business practices more and more in today’s world, Canadian small and medium-sized enterprises (SMEs) are to receive a much-needed financial boost. The federal government has announced that by December 2024, over 600,000 businesses across the country will receive over $2.5 billion in carbon rebates. This initiative coming from the Canada Carbon Rebate for Small Businesses is part of Canada’s efforts to practice sustainability while balancing the financial burden of carbon pricing on smaller companies.

What is a Carbon Rebate?

A carbon rebate is essentially a refund to offset the costs of carbon pricing. In Canada, carbon pricing is set to push companies to reduce their greenhouse gas emissions. However, for many small businesses, carbon pricing leads to increased operational costs, ex. fuel and energy usage. The government has established a rebate system, designed to return a portion of the carbon price back to eligible companies and alleviate this expensive burden.

Am I Eligible?

Eligibility for the Canada Carbon Rebate for Small Businesses is determined by several factors. To qualify, a business must:

• Operate in one of the provinces where the federal fuel charge applies. Businesses located in non-designated provinces can still qualify if they have at least one employee in a designated province.
• Employ fewer than 500 workers across Canada.
• Have filed its 2023 tax return by July 15, 2024.

Businesses that meet these criteria will automatically be considered for the rebate, with no formal application process required.

How is the Rebate Calculated and What to Expect?

The rebate amount is calculated based on the number of employees a business had from 2019 to 2023, multiplied by a payment rate set for each designated province and year.

The exact amount businesses can expect will depend on the specific rates, which are still being determined by the federal finance minister. Precise figures and distribution dates have yet to be announced, but businesses can expect a rough number in the upcoming months.

Looking at a hypothetical scenario. Suppose a small shop in Ontario had an average of 10 employees between 2019 and 2023. If the rebate rate for Ontario is set at $100 per employee for each year, the shop could receive a total of $5,000 in carbon rebates for the 5 years.

How Can this Benefit your Business?

For many SMEs, this rebate offers a financial relief but also allows you to practice sustainably. Increased carbon pricing can strain small businesses that have a tight budget compared to larger corporations. With these rebates, businesses can reinvest in more energy-efficient technologies. This not only reduces their carbon footprint but also helps future-proof their business against future carbon pricing.

The Call to Navigating the Climate

This rebate program reflects a growing global calling towards environmental adaption. Programs like this are designed to easily make this transition for businesses to remain competitive but also contribute to the the world’s climate goals.

Our path is clear: plan for sustainability, keep an eye on energy usage, and make the most of government rebates to a low-carbon economy. With over $2.5 billion in carbon rebates set to be distributed, this is the perfect opportunity to adapt, grow, and thrive in a changing regulatory environment.

To sum up…

The carbon rebate program is a great tool for Canadian small businesses to take charge of the costs associated with carbon pricing. Businesses can expect substantial financial relief by the end of the year as this supports businesses in managing costs and promotes the adoption of greener business practices—helping Canada as a whole move towards a more sustainable future.

Make sure your business is ready by ensuring tax filings are up to date, and consider how this rebate could be a catalyst to your company’s energy-efficient future!