09:01 AM EST, 11/12/2024 (MT Newswires) -- The Canadian Federation of Independent Business (CFIB) said that it has recently learned that Canada's government will be taxing its long-overdue small business carbon tax rebates when they are issued in December.

"This is deeply offensive to small firms and, frankly, a ridiculous idea," said Dan Kelly, CFIB president, in a note. "Government is now planning to tax a tax rebate - it would be like charging income taxes on someone's tax refund."

Months ago, the Canada Revenue Agency told CFIB that it understood the carbon tax rebate would be tax-free as it's modeled after the Canada Carbon Rebate for individuals, which is exempt from personal income taxes.

However, the department of finance confirmed that the small business rebate would be taxable as it's considered government assistance. CFIB has sent a letter to Minister of Finance Chrystia Freeland urging the government to abandon this approach.