CEBA-TAX TREATMENT FOR FORGIVABLE PORTION
While its important to get the loan under Canada Emergency Business Account, its also important to understand the tax impact of it. Under the original program, out of $40,000 loan, $10,000 is forgivable if loan is repaid before Dec 31, 2022. With the expansion of program with addition $20,000, the forgivable portion will be up to $20,000 on total $60,000 CEBA.
Please note the forgivable portion is taxable in the year in which loan is received. Check the table below to check how much additional tax will be payable.
Loan Amount | Taxable in Year 2020 | Tax Payable |
$40,000 | $10000 | $1250 |
$60,000 | $20000 | $2500 |
What happens if full amount of loan is paid back?
If in 2022, repayment of the loan cannot be made in full, the forgivable benefit will be forfeited and you can claim a deduction from you income and if it creates a loss, the loss can carried back to previous 3 years. The same criteria applied for both $40,000 and $20,000 loans.
Questions?
Feel free to reach us for any questions regarding the program. You can call our office number or fill in Get in Touch Form.
