Businesses that received interest-free loans under the Canada Emergency Business Account (CEBA) program now have an additional year to repay these loans to qualify for partial loan forgiveness. Finance has extended the repayment deadline for eligible borrowers in good standing to December 31, 2023 (from December 31, 2022). According to Finance, businesses that repay the balance of these loans on or before the new deadline of December 31, 2023, will receive loan forgiveness of up to a third of the value of the loans (i.e., up to $20,000). Finance states that outstanding loans would subsequently convert to two-year term loans, with interest of 5% per annum commencing on January 1, 2024, and these loans will be fully due by December 31, 2025.
Finance has also extended the repayment deadline to qualify for partial forgiveness for CEBA-equivalent lending through the Regional Relief and Recovery Fund to December 31, 2023.
The government launched the CEBA program in 2020, to help support small businesses and not-for-profits finance certain expenses during the COVID-19 pandemic. Eligible businesses could apply for an interest-free loan of up to $60,000 under the CEBA program until June 30, 2021. The program provides that a portion of the loan is forgivable if the balance is repaid within a certain time. The loan recipient must include the forgivable portion of a CEBA loan in its taxable income in the year the loan is received, unless an election to reduce the amount of a related outlay or expense is filed. If the amount is subsequently repaid, the loan recipient can claim a deduction in the year of repayment.
For more information, contact your KPMG adviser.
Information is current to January 17, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500