Canada: Deadline to qualify for partial loan forgiveness extended to end of 2023
Canada has extended the repayment deadline for eligible borrowers in good standing to 31 December 2023.
Deadline to qualify for partial loan forgiveness extended to end of 2023
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.
Canada’s Department of Finance has extended the repayment deadline for eligible borrowers in good standing to 31 December 2023 (from 31 December 2022). According to Finance, businesses that repay the balance of these loans on or before the new deadline of 31 December 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 1 January 2024, and these loans will be fully due by 31 December 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 31 December 2023.
Background
The government launched the CEBA program in 2020, to help support small businesses and not-for-profits finance certain expenses during the coronavirus (COVID-19) pandemic. Eligible businesses could apply for an interest-free loan of up to $60,000 under the CEBA program until 30 June 2021. The program provides that a portion of the loan is forgivable if the balance is repaid within a certain time. The loan recipient must include the forgivable portion of a CEBA loan in its taxable income in the year the loan is received, unless an election to reduce the amount of a related outlay or expense is filed. If the amount is subsequently repaid, the loan recipient can claim a deduction in the year of repayment. Read TaxNewsFlash
Read a January 2022 report prepared by the KPMG member firm in Canada
*$=Canadian dollar
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