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Taxability of Covid-19 Relief Measures

As part of the government’s relief measures during Covid-19, Canadians should be mindful of the tax implications as set out below:

  1. The $2000/month CERB benefit is taxable on your Personal Tax Return for 2020.
  2. The CEWS wage subsidy for businesses is taxable in the fiscal year in which it was received by the corporation.
  3. The $40K CEBA loan and the commercial rent subsidy, CECRA, have a “forgivable” element to the loan/subsidy, discussed in more detail below:

Taxation of Forgivable Loans:

The forgivable portion of the CEBA (25% – up to $10,000) and 100% of CECRA will be taxable in 2020.  If any of the forgivable portion is repaid, because requirements were not met, then this can be deducted in the taxation year when the amount is repaid.

The fact that these items are taxable does not affect revenue for the Canada Emergency Wage Subsidy (CEWS) calculation.  The definition of “qualifying revenue” for CEWS allows the exclusion of funding received from government sources.

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