It has come to our attention that some businesses have received notices stating they don’t qualify for the CEBA loan. Impacted businesses will have no portion of the CEBA loan forgiven and must repay the full amount of the loan by the end of 2023. It appears that these notices represent final determinations, and no appeals process is in place. We spoke to other business stakeholder groups and were told that they have expressed concern to the federal government on the fairness of not having the ability to correct the original application or appeal the determination (along other concerns).\nA legal requirement to repay the forgivable portion of the CEBA loan will require impacted business and their advisors to consider the resulting tax implications. As you may recall from our January 2021 blog post 2020 Round Up: Income tax impacts of key COVID-19 support programs, pursuant to paragraph 12(1)(x) of the Income Tax Act, impacted businesses should have already included in income the part of the loan that was potentially forgivable in the year the loan was received. Alternatively, under subsection 12(2.2), an election could have been made that would have offset the forgivable portion against certain non-deferrable operating expenses. Where an impacted business no longer qualifies for forgiveness of a portion of the CEBA loan, a deduction can be claimed in the taxation year in which the forgivable portion is repaid. Therefore, the prior year tax return that contains the income inclusion for the forgivable portion of the CEBA loan should not be amended.\nIf the CEBA loan is repaid over more than one taxation year, the Canada Revenue Agency (CRA) confirms in technical interpretation 2020-0862931C6 that it will be necessary to determine to what extent the forgivable portion was repaid as part of each repayment. According to the CRA, reference should be made to the loan agreement to determine if it is the intent of the parties that repayments are first applied to reduce the forgivable portion. If so, an impacted business could claim a deduction under paragraph 20(1)(hh) with respect to the amount repaid in the taxation year in which the reimbursement is made, up to the amount included in its income previously under paragraph 12(1)(x) or where an expense was reduced. However, if the intent of the parties is unclear, then the CRA states that deduction under paragraph 20(1)(hh) should be prorated based on the amount of the partial repayment.\nWe will continue to keep you informed of any important developments.