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Canada Emergency Business Account (CEBA)


If you have applied and received the first $40K loan (25% forgivable) and/ or the second loan of $20K ($10K forgivable), it is important that you understand the timing and tax treatment of the forgivable portions of both loans.


The forgivable portions of CEBA loans are taxable when received, but if and when repaid, are deductible. This means that the forgivable portion of CEBA will be taxable in 2020. If any of the forgivable portion is repaid, because requirements were not met, then this can be deducted in the taxation year when the amount is repaid.


In other words, if you applied and received both loans in 2020, you must include $20K as income. The unforgivable $40K should be treated as a loan payable on the balance sheet.


here is the logic, you are more likely to repay the loans by December 31, 2022 to benefit from the $20K forgiveness.


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