There are also individuals (Consultants, shop keepers, florists, hair salons, beauty salons, and coffee shops) who have incorporated their businesses who pay themselves on dividends instead of salaries. We do know, however, that the CRA has invested significant resources to protect the integrity of the COVID-19 support measures. Anyone knows if non-eligible dividends are now admissible for CEBA loans, similar with CERB? The government has announced Canada Emergency Business Account (CEBA). It appears that the CERB eligibility rules are becoming more balanced and neutral as they are being developed. in correlation to the the impact they have experienced as a result of COVID-19 (however difficult it is to determine). It started last week when they made additional types of businesses eligible for the CEWS and extended its timeline, and now they've amended the rules for the CEBA once again as well.

Previously, the program was available only to businesses with payrolls between $20,000 and $1.5 million.

Will you do the same? The launch date for applications under the new eligibility criteria “will follow in the days to come,” the government said. Local: 519.673.3141 "Please rehire your workers and use the wage subsidy for their paycheque — that's what it's there for. Following the publication, I received tens of messages from tax professional across the country who were concerned for their clients like Dividend David. In my earlier post The Flaws of the CEBA Program and How to Fix Them I argued that the 2020 current non-deferrable operational expenses should be considered for the CEBA eligibility instead of the 2019 payroll amount. But the CFIB called on the government to increase the total amount of CEBA loans, as well as the forgivable portion. Non-eligible dividends count towards the minimum $5000 in income required for eligibility. As such, you will need electronic or paper copies of receipts / invoices / agreements to be uploaded as evidence of your 2020 eligible non-deferrable expenses. The CEBA is among the business support measures introduced in the Federal Government’s COVID-19 Economic Response Plan. 10-15 days after the Government receives your application along with any required supporting documents. There are no requirements for a drop in revenues for the CEBA loan. These flaws of the program drew a lot of criticism from small business advocates, including yours truly. CEBA funds cannot be used to repay or refinance an existing indebtedness. In the case study, Peter was not eligible for the CERB because he was still working and earning nominal income. I don't have $40,000 in eligible non-deferrable expenses, but I paid over $20,000 in salaries in 2019. https://t.co/PXMpwTvulu.

Subscribe to our blog and our social media for important updates.

Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000). Step 2: Following the initial application through your financial institution, applicants will be directed to a CEBA website to provide supporting documentation of the 2020 eligible non-deferrable expenses and to complete the application. Unsubscribe anytime or, Sign up for our free email newsletter so you’re always in the know. "Businesses like yours are the backbone of our economy and the lifeblood of our communities," the PM said. CEBA funds cannot be used for payments of dividends, distributions and increases in management compensation. No credit check will be performed during the approval process. Unfortunately for owner-managers, remuneration does not include dividends. Amendments to the program's eligibility criteria were announced on April 16, 2020 and on May 19, 2020.

Working with financial institutions, the CEBA provides a loan of up to $40,000 to eligible businesses to assist with their immediate operating cash flow needs.

You still need T4 payroll to qualify. For many, the business income is too low to afford a payroll of up to $20,000 therefore too low to qualify for a CEBA loan.

Stay tuned for #advotaxlawupdates about Sally, Peter and David. CEBA applications under the 2020 Eligible Non-Deferrable Expenses Stream will follow a two-step process: Step 1: Businesses will initiate applications directly at their primary financial institution where they hold their primary business chequing / operating account.