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The original CEBA loan was for up to $40,000 but, as of Dec. 4, 2020, an additional $20,000 CEBA loan is available to qualified applicants, for a total of up to $60,000. Those who previously received a $40,000 loan may apply for an additional $20,000. New applicants may apply for a $60,000 loan and the application deadline for new (or additional) CEBA loans is March 31, 2021. Up to $20,000 of a $60,000 loan can be forgiven if the balance is repaid by Dec. 31, 2022. For original loans of $40,000, 25 per cent of the amount (up to $10,000) may be forgiven.
In a recently published technical interpretation, the CRA has confirmed the amount that is forgivable is taxable in the year that the loan is received. For instance, if a business receives a $40,000 CEBA loan in 2020, $10,000 must be included in income in 2020. Alternatively, a business could elect to not include the $10,000 in income, and instead to reduce $10,000 of non-deferable operational expenses in respect of which the CEBA loan was received. If a CEBA loan balance is not repaid by Dec. 31, 2022, so that the forgivable portion is not forgiven, an offsetting deduction is available in the tax year in which the amount is repaid.
Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.