The Canada Emergency Business Amount (aka CEBA) is a loan of $40,000 at zero percent interest. This loan is not repayable until December 31, 2022. If you repay the balance by December 31, 2022 then you receive a grant of $10,000 (If you have received the additional amount of $60,000, and pay the $60,000 back, then the grant portion is $20,000). In either case, section 12 of the Income Tax Act reads that the grant portion is taxable income when you received the money. The conclusion is that you must report $10,000 as income on your 2020 tax return.
If you fail to pay the loan back by the end of 2022, you will not be eligible for the grant portion, so then you can take a deduction for the amount you included in income in 2020, in 2022, which is the year that you found out that you did not earn it. For accounting purposes, a case could be made that you do not report the loan as a grant until the grant has been earned, which will occur in 2022.
Accountant’s opinions will vary on this. There was some discussion earlier in this year about how there might be a CRA ruling on CEBA not being taxable in 2020. Nothing has come of that, yet.