Tax Tip Thursday

I’ve been getting a lot of questions lately about a couple of things: CEBA and HST. So, let’s talk about them!

CEBA

For those of you with small business that took CEBA loans, you may have heard that the date of repayment was changed from Dec 31, 2022 to Dec 31, 2023 for eligible businesses. So, who’s eligible?

From the CEBA Website,

“The existing terms of CEBA loans require that the outstanding balance (other than the amount available to be forgiven) be repaid on or before December 31, 2022, to be eligible for partial loan forgiveness. The Government of Canada has announced the December 31, 2022 forgiveness repayment date will be extended to December 31, 2023, for eligible CEBA loan holders in good standing. If you qualify for the new extended term, you will be contacted with details regarding the new repayment date.”

CEBA loan holders in good standing have not been defined. Given that no payments are required along the way, it seems to me that all CEBA loans are in good standing. The one way they might get you is if you have other loans that are NOT in good standing. They may use that as a measure. Not sure, but my advice would make sure that whatever loans you have in place, you might want to make sure they are in good standing!

Regardless of how that unfolds, you will want to make sure you do whatever you can to pay back the base amount. $20k on $40k or if you got $60k, you must pay back $40k. For those of you that listened to the show back in 2020 when this all started, you will know that I was warning people about being careful with the money.

For those of you who received the loan and needed it and used it as funding for your business, hopefully, it has paid off for you. If you do not have the base amount (the non- forgivable amount) to pay back, you may want to consider approaching a bank to get a line of credit or loan to pay it back by the deadline. Otherwise, you will be paying back an additional $20k. This will require you to have your taxes up to date as well as financial records up to the date that you are applying for the line of credit or loan. Please keep in mind, that it will take time and you should leave yourself at least 60 days to get the funding in place for yourself.

For those of you who may have received the loans, but were fortunate enough to have not needed the money, I hope you invested it wisely. If not, now is still a great time to do so. A cashable GIC could put 3% – 5% interest in your bank account. This gives you flexibility in case the loan is called at the end of this year but also lets you put a few dollars in your pocket.

For those of you that spent the money with no promise of getting a loan, you might want to come up with a budget and start setting aside the funds so that you can repay the loan. Hopefully, you have 16 months.

Whatever you do, you should try and come up with the money to pay back the base amount to save yourself $20k.

HST

As business owners, we collect HST on behalf of the CRA. Please remember this is NOT revenue that you have earned. It is NOT your money. You are merely a tax collector on behalf of the government. You need to put this money aside when you collect it or you will find yourself in big trouble. The CRA is relentless when it comes to HST. They are trust funds and NOT your money. You do NOT want to be on the wrong side of this tax. Please pay it as you go. Keep your books up to date and you can literally send them money every month! For all of our bookkeeping clients, we provide them with a report every month letting them know their HST is payable and we advise that they send it to the CRA.

Behind on HST Payments?

That’s okay, but it’s time to get caught up. Call us today and we will help you figure out how much you owe the CRA in HST and how you’re going to pay it. While we’re at it, maybe we can find a way to save you a few dollars next tax season!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.