The Consolidated Appropriations Act 2021 (CAA) (PL 116-260), which is 5,593 pages long, funds the government for its fiscal year ending September 30, 2021 and makes major tax changes for businesses. CAA is also making changes to the Paycheck Protection Program and other financial aid options that have tax implications. The following is a brief summary of these key changes. Most of the changes come into effect after 2020, but some of them affect 2020 tax returns.

Paycheque Protection Program Loans

Help for hard-hit businesses. The Economic Aid for Small Businesses, Nonprofits, and Hard-Affected Sites Act, which is incorporated into CAA, makes two changes to the Paycheck Protection Program (PPP). The CAA includes $ 284 billion for new PPP loans and these loans may be tax exempt. The definition of expenses eligible for the rebate has been broadened to include covered operational expenses (e.g. software, cloud computing and other human and accounting resource needs), costs of covered property damage related to riots in 2020 not covered by insurance, the costs of the covered suppliers (for example, expenses under a contract, purchase order or order for goods in force before the loan was taken out that are essential operations of the beneficiary at the time the expenditure was made) and worker protection expenses covered such as personal protective equipment (PPE). The period covered during which the expenses are taken into account for the remission can end at the choice of the borrower between 8 and 24 weeks after the origination of the loan.

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