Canada: Deadline to qualify for partial loan forgiveness extended to early 2024
Businesses that received interest-free loans under CEBA program now have until 18 January 2024 to repay these loans
Deadline to qualify for partial loan forgiveness extended to early 2024
Businesses that received interest-free loans under the Canada emergency business account (CEBA) program now have until 18 January 2024 (previously 31 December 2023) to repay these loans to qualify for partial loan forgiveness.
In addition, borrowers who file a refinancing application with their financial institution by 18 January 2024 will have until 28 March 2024 to qualify for partial loan forgiveness.
Businesses that repay the balance of these loans on or before the new deadlines will receive loan forgiveness of up to a third of the value of the loans (i.e., up to $20,000*).
If businesses have outstanding loans on 19 January 2024, those loans will subsequently convert to three-year term loans with interest of 5% per year, due in full by 31 December 2026 (previously 31 December 2025).
These changes also apply to CEBA-equivalent lending through the Regional Relief and Recovery Fund.
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 $60,000 under the CEBA program until 30 June 2021. The program provides that a portion of the loan is forgivable if the balance is repaid within a certain time. The loan recipient must include the forgivable portion of a CEBA loan in its taxable income in the year the loan is received unless an election to reduce the amount of a related outlay or expense is filed. If the amount is subsequently repaid, the loan recipient can claim a deduction in the year of repayment. Read TaxNewsFlash
Read a September 2023 report prepared by the KPMG member firm in Canada
*$=Canadian dollar
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