ProStrata-G recently learned that The Canada Revenue Agency is already performing reviews (precursor to an audit) on Small Businesses that received CEBA (Canada Emergency Business Account).
The CEBA loan was provided to several Manitoba businesses with a forgivable portion. If a business received $60,000 from the province, they would not have to repay $20,000 of the loan. The remaining $40,000 (the payable portion) should be repaid before December 2022. With the life of the loan spanning more than one tax year, it was a surprise to some business owners to learn the forgivable portion ($20,000) MUST be claimed as income in the year the loan was received.
Most business owners, bookkeepers, accountants, tax preparers, etc., don't deal with forgivable loans on a regular basis and may have unknowingly left out income on 2020 tax returns, believing the forgivable portion could be claimed in subsequent years or later in the span of the loan terms.
Unfortunately, this scenario creates an "easy" audit project for CRA. The Canada Revenue Agency will likely re-assess those who have not declared the income from their CEBA loans in 2020. The consequences of additional tax, interest, and penalties, could negatively effect several small business owners.
ProStrata-G ProAdvisor Tip:
It is important to speak to your financial team (bookkeeper, accountant, CPA, tax preparer) when considering loans, grants, or benefits for your small business. Understand the tax consequences before you sign!
Need help understanding how loans, grants, or any other incoming funds affect your bookkeeping, and tax position? Call a ProStrata-G ProAdvisor today for a consultation. 204-594-4214
Reference:
コメント