Ask an Accountant – The CEBA (Canada Emergency Business Account) What you need to know now:

Francesca Giroux, CPA
For the Lakeside Leader

1.Corporations including subcontractors are eligible if they have paid themselves above $20,000 (and less than $1,500,000) in the 2019 Calendar Year

2.Application is through your business online banking (it cannot be done through your banker or in person), you will need 2019 T4 Summary of Remuneration Paid Statement which has your total paid for wages as well as your 15 digit CRA reference number (ending in RP0001)

3.Funds can only be used to pay non-deferrable operating expenses including but not limited to: payroll, rent, utilities, insurance, property taxes, regularly scheduled loan payments (i.e. company vehicle loan, existing credit payments).

4.The $40,000 cannot be used for prepayment of existing loans, or refinancing, payments of dividends, shareholder distributions or increases in management compensation.

5.This means that you can continue to pay yourself through your corporation your regular monthly wage and payroll remittances using the $40,000 but this amount cannot increase.

Repayment of the CEBA Loan:

1.The loan will be interest free until January 1, 2023, starting this date interest will accrue on the balance of the loan at five per cent, payable monthly.

2.The loan can be repaid in part or in full at any time without penalty, principal payments are not required until December 31, 2025. The entire loan and all accrued/unpaid interest are due and payable on December 31, 2025.

3.If you pay 75 per cent of the balance of the term loan (balance is calculated at January 1, 2021) on or before December 31, 2022, the remaining balance will be forgiven. For example, ABC Corp. used the entire $40,000 for non-deferrable expenses and the amount is outstanding on January 1, 2021. ABC Corp. pays back $30,000 before December 31, 2022; therefore the government will forgive the $10,000 balance remaining.

4.Debt forgiveness is considered to be a taxable amount for the corporation; as such upon any forgiveness your corporation will owe taxes at their corporate tax rate on the year-end that the forgiveness occurs in.

Please e-mail any questions you may have to frankie@nashgirouxllp.ca.

Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CPA for information specific to your own needs.

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One thought on “Ask an Accountant – The CEBA (Canada Emergency Business Account) What you need to know now:

  1. Do I understand this to mean that if the loan is repaid before December 31, 2020 one would not be eligible for the 25% discount?

    Secondly, assuming that I used the loan back in March and April to pay rents and suppliers, I am still not eligible to declare a dividend until the loan is repaid?

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