What would be the GIFI codes for Schedule 125 and Schedule 100 to use for reporting CEBA, CEWS and Temporary Wage Subsidy on Corporate Tax returns T2?
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Actually you can use the CRA GIFI guide to select the required codes. The guide is available here. ProFile agents cannot help select GIFI codes but maybe other community users have advice
Hope this helps
As per the CRA, the subsidies for wages and rents and 10K of the CEBA ($40,000) and any other forgivable portion of future CEBA loans are reported as income on S125 on line 8242
On S100 you record the 10K and any other forgivable portion of future CEBA loans on line 2304 in your assets and the 30K (and any other repayable amounts) on line 2701 in liabilities.
This is as per CRA ruling #2020-0861461E5 in December 2020.
At this time, I was told by CRA that if the loan is not repaid in time for the forgiveness portion to be taken, then you must go back and amend the tax returns where you reported the forgivable portion as income to reflect the full amount in S100 liabilities line 2701.
Been looking for the GIFI codes myself. I 'm thinking:
8249 Expense Recovery for the Temporary Wage Subsidy since although the CRA said to count it as income it is in fact a deduction of an expense. Using 8249 lands it in the income section, but flags it as separate from 'real' income, so that seems right.
8230 Other Revenue for the $10K forgivable portion of CEBA that counts as income (the GIFI says the definition of other revenue is "gains on settlement of a debt", among other things, so sounds right)
3140 Long Term Debt or 3149 Line of Credit for the remaining $30K of CEBA. I would think it has to be long term since the repayment term is greater than one year. Depends how your bank gave it to you but mine is a credit card for a line of credit. Blurs the line between current and long-term, but long-term liability makes more sense to me since I don't owe anything really until 2022.
This is so helpful, thank you!
Any sense of how to balance the journal entry though?
Cr 2304 Gov't of Canada Debt $ 10,000 (forgivable portion of CEBA loan)
Cr 2701 Loans from Canadian banks $30,000 (non-forgivable portion)
Dr Cash $40,000
Cr 8242 Subsidies & Grants $10,000 (forgivable portion of CEBA loan)
.... then what? How to balance that dangling income? Eventually, when the loan is paid back, it makes sense to Dr 2304 to reduce that to zero. But the loan hasn't been repaid yet, so that leaves things unbalanced for 2020. Thoughts?
I believe the entry would be something like the following...
1) DR: Cash $40K
CR: Government CRA Loan $40K (liability and payable in the future)
2) DR: Government CRA Loan Forgiveness $10K (reduction of the liability)
CR: Loan forgiveness $10K (other income which is the portion that's considered "forgiven")
If you pay back the full amount in the future, then the adjusting entry J/E would be...
3) DR: Govt CRA loan $30K (Liability B/S)
DR: Loan forgiveness OR Loan expense (Expense I/S) $10K
CR: Cash $40K (Asset B/S)
But if you don't need to pay the full amount in the future year 2022... then the J/E would simply be:
4) DR: Govt CRA loan $30K (Liability B/S)
CR: Cash $30K (Asset B/S)