The carnival was set to be held between December 26 and January 10.
The decision was announced at a volunteer meeting last night.
"The Govt guidelines at the time of making our decision meant there was no way we could run our carnival," organisers said on Facebook.
"We feel the well being of volunteers and the community and any exposure of Covid-19 into the district would jeopardize the carnival and as hard as the decision was to make, we believe it was the right one."
This year's carnival was to include entertainment including a Eagles tribute show and Elton John tribute show, talent quests and a New Year's Eve fireworks show.