Tax Tip Thursday

Both loans are combined. If the total is up to $40,000, you get 25% forgiveness as long as you pay back the other 75% on time (by Dec 31, 2022). If the total is above $40,000, you only get forgiveness if you pay $30,000 plus 50% of the excess on time. The forgiven amount will be $10,000 plus 50% of the loan in excess of $40,000. If you already repaid the original $40,000 loan, claimed forgiveness, and then borrowed the additional $20,000, you get 50% forgiven once you have repaid 50% of the loan.

Even for the original loan! An amended agreement which certifies that all expenditures since the beginning are “non-deferrable eligible expense” must be signed, even if the first loan agreement you signed was different.

This is required to attest that COVID-19 has negatively impacted your business. Owners must attest that it is facing ongoing financial hardship (including, for example, a continued decline in revenue or cash reserves, or an increase in operating costs), intends to continue to operate, and has made all reasonable efforts to reduce its costs and to otherwise adapt its business.

Sound complicated and need a hand with it? Contact me and I’ll be happy to help you out!

If you received a $40,000 loan and subsequently received the $20,000 expansion, the terms of your forgiveness have changed and are described here.

Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in a single tranche of loan forgiveness up to $20,000 based on a blended rate from your balance on June 30, 2021:

• 25% on the first $40,000; plus
• 50% on amounts above $40,000 and up to $60,000.

For clarity, the portion of forgiveness based on a rate of 25% and the portion of forgiveness based on a rate of 50% are combined into a single tranche of forgiveness, which is only available if all other amounts outstanding are repaid by December 31, 2022. For example, if $60,000 is borrowed, no forgiveness is available unless $40000 is repaid.

So again — be careful! Use the CEBA website or contact me to make sure you understand how this process works!

They have revised this! Effective September 27 you can apply:

• Period 1: Sept 27 – Oct 24
• Period 2: Oct 25 – Nov 21
• Period 3: Nov 22 – Dec 19 (opening soon)

The application process and eligibility is pretty much the same as the wage subsidy. To qualify, the following applies to your business:

• Your business must own or rent, and use the property in the course of your ordinary activities.
  • The following do not qualify:
    • rental props
    • homes
    • cottages
• All rent and mortgages must be paid to arms length people
  • There must be an agreement
  • Rent must be paid within 60 days of receiving the subsidy
  • This includes rent, mortgages, taxes insurance, and utilities

Be sure to explore all the eligibility requirements and eligible expenses in detail! Please don’t hesitate to contact me if you need any help or clarification.

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.