The purpose of this correspondence is to update you on the latest changes that have been made in relation to the Canada Emergency Business Account (CEBA). In March, the federal government announced the creation of the CEBA to support businesses impacted COVID-19. You can view our previous CEBA release here.
The original legislation had requirements that may have been restricting access to the credit for some business owners. These requirements were broadened in April to include more businesses. On May 20, 2020, the federal government announced that further changes will be coming that will provide even more businesses with access to the CEBA loan.
Previously, businesses were required to have incurred payroll expenses amounting to between $20,000 and $1.5 million in 2019, supported by the 2019 T4 Summary, to access this credit. Now businesses with a payroll less than $20,000 can qualify if the following criteria is met:
- A business account at a participating financial institution;
- A Canada revenue agency account and to have filed a 2018 or 2019 tax return; and,
- Eligible non-deferrable expenses between $40,000 and $1.5 million (rent, property taxes utilities, and insurance could be considered non-deferrable expenses).
The above-noted details are all that were released by the government, but they have indicated that more information will be coming. While we will need to wait for further details to be released to confirm eligibility, this is encouraging news for a number of businesses that will benefit from this funding and did not previously qualify because of payment through dividends or reliance on contractors instead of incurring payroll costs.
We will continue to provide updates as they become available and are happy to discuss any questions you may have about these matters. To review any of our previous updates on COVID-19 please see our website.
This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.
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