CEBA question re. financing added

The following question and answer was added to the CEBA website:

What are the requirements for a refinancing application on or before January 18, 2024 to qualify for the extended forgiveness deadline of March 28, 2024?

If you are an eligible loan holder in good standing and you apply to refinance your CEBA loan at the same financial institution that originally provided your CEBA loan on or before January 18, 2024, you can qualify for partial loan forgiveness if the outstanding principal of your CEBA loan, other than the amount available to be forgiven, is repaid on or before March 28, 2024. This does not prevent you from also applying for refinancing with other lenders—as long as you applied for refinancing at the same financial institution that originally provided your CEBA loan and your CEBA loan is repaid by March 28, 2024, you can qualify for partial loan forgiveness.

To submit a refinancing application, please contact the financial institution that provided your CEBA loan for more details on the refinancing options available to you and their application processes. In order to provide you with flexibility to find the most suitable refinancing solution for your situation, the CEBA Program does not limit the loan type or terms that qualify as a refinancing application. As such, a range of potential refinancing solutions may be offered by your financial institution, including applying for or requesting new credit or making or requesting changes to an existing credit facility for the purpose of repaying your CEBA loan. Refinancing products provided by financial institutions are conventional loans between you and your financial institution. They are underwritten using the standard lending practices of your financial institution and are not affiliated with the CEBA Program or the Government of Canada.

Please note that if your CEBA loan is outstanding on January 19, 2024, interest at a rate of 5% per annum will commence, even if you applied for refinancing on or before January 18, 2024 and are waiting for your refinancing application to be reviewed or the proceeds of an approved refinancing loan to be funded or applied to your CEBA loan balance.

If you are considering applying for refinancing, don’t leave it to the last minute. Financial institutions are likely to receive a large volume of CEBA refinancing applications. Make sure you apply on or before January 18, 2024.

,

Watch! Life in the Tax Lane - December 2023

,

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

Sources:

Program Recorded: November 24, 2023.

Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2023, All Rights Reserved.

 
 

Personal services businesses (PSBs) - pilot project continuation

This morning, CRA released the results from Phase 1 of its PSB pilot project that ended in December of 2022. Some notes:

  • Of the 2,100 corporations that participated, just over 10% were likely to be utilizing PSBs.

  • 64% of potential PSBs were incorrectly claiming the small business deduction (SBD)., which they are not eligible for as a PSB. This would have resulted in an average of $16,711 more in corporate tax.

  • Nearly 74% of the potential PSBs identified work in 3 sectors/industries:

    • Transportation and warehousing (35%),

    • Professional, scientific and technical services (26%), and

    • Construction (13%).

Phase 1 focused on entities engaging PSBs. Phase 2, running from October 2023 to June 2024, will target PSBs directly. The review will examine the 2022 tax year. The purpose of the phase is to gather more information and provide education. Phase three (no timeline set) will continue to focus on education but will also include assisted compliance.

For more information, click here.

Watch! CRA review trends and reportable transactions update with Ken Sedgewick

Which recent month was the busiest for CRA review activity?

Curious about the most common types of CRA review letters trending across Canada for individual and small to medium-sized businesses?

Learn the answer to these and more in this 12-minute interview with Caitlin Butler and Ken Sedgwick, Business Development Manager at Audit Shield.

Stay tuned as they also discuss updates to the reportable transaction rules, specifically those related to tax return insurance.

Recorded November 10, 2023

This video is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2023, All Rights Reserved.

Brief - 2023 Fall Economic Statement

On November 21, the 2023 Fall Economic Statement was released. It included the following proposals:

  • to deny income tax deductions for all expenses incurred to earn short-term rental income (e.g. Airbnb, VRBO), including interest expenses, where operators are not compliant with municipal or provincial restrictions;

  • that bona fide concessional loans with reasonable repayment terms would not be government assistance;

  • to exempt the first $10 million in capital gains realized on the sale of a business to an employee ownership trust from taxation;

  • to introduce new elements to the clean hydrogen, clean technology and clean electricity  investment tax credits;

  • to increase the Canadian journalism labour tax credit;

  • to introduce a new 15-week shareable EI adoption benefit; and

  • to remove GST/HST from psychotherapists’ and counselling therapists’ services.

Consultations on the following matters were also announced:

  • on proposed changes to the Underused Housing Tax (UHT), including a significant expansion of the definition of “excluded owner,” a reduction of the penalties and a reduction of the types of properties subject to the rules; and

  • on proposed GST/HST joint venture election rules.

The government also noted its intention to proceed (subject to modifications due to feedback) with several previously announced tax and related measures, including the following:

  • strengthening the intergenerational business transfer framework;

  • the alternative minimum tax for high-income individuals;

  • updating the general anti-avoidance rule (GAAR);

  • excessive interest and financing expenses limitations (EIFEL); and

  • substantive Canadian-controlled private corporations.

*Updated November 23, 2023