Previous accountant forgot to deal with CEBA repayment!

Tax Topics
1

Sigh…new client T2. Reviewed books…CEBA was repaid by taking an LOC (refinance essentially) but client DID get the $20K forgiveness. Problem: prior accountant did not clear the forgiven part on the last T2 or in the GL! (Paid in Jan/24 and now doing the 25 return so balances are wrong of course.) So now client remains with a $40K balance ($20K LOC / $20K original CEBA not recorded as forgiven).

I s’pose the “correct” way would be simply to file a revised 24 T2 with the changes - income statement income inclusion, reduction of loan, offset on Line 705. As there’s no tax change this seems a bit of a “management” issue more than anything. (Corp is small and was not taxable in 2024.) PPA on the F/S.

Recording the same entries in the current year accomplishes the same thing…but is a year off-kilter.

Proper or easy? (LOL - this is like “head vs heart”.) I’m leaning to proper even though it’s kinda goofy.

Note: There is NO external reporting to anyone other than CRA.

2

You are assuming the client did report the CEBA forgiveness grant/income on their first T2 return after the CEBA loan(s) were received. Although it may not have been the status quo if I remember correctly I reported the forgiveness as income immediately and reduced the amount of the loan outstanding. No further adjustments were needed once the actual CEBA repayment was made, as the loan repayment matched the balance sheet amount. Joe would likely scold me if he could read this… :slightly_smiling_face:

3

They did! I got a copy of the returns and both are clearly on there. (Thankfully!)

Loan remained at full value, so just the income inclusion on Sch 1, now to be reversed.