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TAX ALERT!
Canada Emergency Business Account: Government extends repayment and partial loan forgiveness deadlines
It is very important to pay attention to details announced by the government, there is no additional 1 year postponement to qualify for the CEBA loan forgiveness, its only pushed back a little over two weeks so our December holidays doesn't look too gloomy heading into the new year. Below I quote from the Department of Finance's news announcement:
"The repayment deadline for CEBA loans to qualify for partial loan forgiveness of up to 33 per cent is being extended from December 31, 2023, to January 18, 2024, recognizing that the end of December is a busy time for many Canadian businesses. This builds on the government’s previous one-year extension announced in January 2022.
For CEBA loan holders who make a refinancing application with the financial institution that provided their CEBA loan by January 18, 2024, the repayment deadline to qualify for partial loan forgiveness now includes a refinancing extension until March 28, 2024. This will allow more small businesses and not-for-profits to access relief and give them more time to hear back from their financial institutions on refinancing applications.
As of January 19, 2024, outstanding loans, including those that are captured by the refinancing extension, will convert to three-year term loans, subject to interest of five per cent per annum, with the term loan repayment date extended by an additional year from December 31, 2025, to December 31, 2026. Put simply, small businesses and not-for-profits will automatically have access to a three-year, low-interest loan of up to $60,000 if they have not repaid or refinanced their loan. This will provide those who are unable to secure refinancing or generate enough cashflow to repay their loans by the forgiveness deadline an additional year to continue repayment at a low borrowing cost.
Repayment on or before the new deadline of January 18, 2024 (or March 28, 2024 if a refinancing application is submitted prior to January 18, 2024 at the financial institution that provided their CEBA loan), will result in loan forgiveness of $10,000 for a $40,000 loan and $20,000 for a $60,000 loan."
New Changes affecting Taxpayers in 2023
The biggest change in 2023 that could significantly impact taxpayers would be the new Anti-flipping rules:
The new anti-flipping rules for residential real estate are scheduled to come into force on January 1, 2023 and it is designed to “reduce speculative demand in the marketplace and help to cool excessive price growth.” This new residential flipping rule was provided under to Bill C-32 which received Royal Assent on December 15, 2022.
The principal residence exemption will not be available on the sale of your home if you’ve owned it for less than 12 months (with certain exceptions). Instead, the gain will be 100-per-cent taxable as business income.
In other words, when you make a profit from the sale of a property that you own for less than 365 days, the profit you make is deemed to be business income, 100% of it is taxable even if it is your principal residence.
Usually when an individual sells a residential property the taxable capital gain is eliminated by claiming the principal residence exemption. When the taxpayer reports this in his return, the Form T2091(IND) must be completed to designate the related property disposed as a principal residence.
Under the new rule, a gain on a “flipped property” sale is deemed to be business income and fully taxable. No principal residence exemption is available to reduce the tax. This rule only applies to gains; individuals cannot report a business loss on a property just because it meets the definition of a flipped property.
A “flipped property” is defined as a housing unit that:
-is located in Canada
-would not otherwise be inventory of the taxpayer
-was owned by the taxpayer for less than 365 consecutive days prior to the disposition of the property
However, an exclusion may be available where the property is disposed of due to a qualifying life event.
The following exception however applies where the flipping rules will not apply:
a) death of the taxpayer or a related person;
b) related person joining the household (birth of child, adoption, or care of elderly parent) or the taxpayer is joining a related person’s household;
c) breakdown of marriage or common-law partnership of the taxpayer (if living apart for at least 90 days prior to the disposition);
d) threat to the personal safety of the taxpayer or a related person;
e) disability or serious illness of the taxpayer or a related person;
f) eligible relocation” of the taxpayer or their spouse or common-law partner (e.g., a work relocation where the new home is at least 40 km closer to the new work location);
g) involuntary termination of employment of the taxpayer or the taxpayer’s spouse or common-law partner;
h) insolvency of the taxpayer; and
i) destruction or expropriation of the property against the taxpayer’s will (e.g., due to a natural or human-made disaster).
Finally, as a result of changes made in Budget 2022, a sale made by an individual of a residential condominium or single unit residential complex by way of assignment is taxable for GST/HST, regardless of the reason for the acquisition of the property.
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