Updated CEBA Terms and Key Dates

General Program Information

The Government of Canada provided the Canada Emergency Business Account (CEBA) to support Canadian businesses adversely affected by COVID-19 through loans up to $60,000. Until January 20, 2022, your loans are most likely funded as a revolving line of credit, after which date the outstanding balance will be converted to a term loan.

Originally, organizations could qualify for loan forgiveness if stated repayments were made by December 31, 2022.  On January 12, 2022, it was announced that eligible CEBA borrowers in good standings, repaying the balance of the loan on or before December 31, 2023, will result in loan forgiveness of up to 33 percent (up to $20,000).

If you qualify for the new extended term, your financial institution will contact you and provide details regarding the new repayment date. CEBA eligibility criteria validations have been completed for all borrowers and the results of these validations are final.

 All applicants that meet CEBA eligibility criteria will have the following repayment terms:

Interest:

• 0% per annum interest until December 31, 2023

• 5% per annum interest starting on January 1, 2024; interest payment frequency to be determined by your financial institution

Repayments & Maturity:

• No principal repayment required before December 31, 2023

• If loan remains outstanding after December 31, 2023, only interest payments required until full principal is due on December 31, 2025

Debt Forgiveness:

• If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by December 31, 2023, the remaining principal amount will be forgiven, provided that no default under the loan has occurred

Should you have any questions, please do not hesitate to contact us or your bank representative for further details

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CEBA Terms and Key Dates

General Program Information

The Government of Canada provided the Canada Emergency Business Account (CEBA) to support Canadian businesses adversely affected by COVID-19 through loans up to $60,000. Until January 20, 2022, your loans are most likely funded as a revolving line of credit, after which date the outstanding balance will be converted to a term loan.

Organizations may qualify for loan forgiveness if stated repayments are made by December 31, 2022.

Key Dates

1. January 20, 2022: Revolving line of credits are converted to term loans and you will no longer be able to access these funds. Your bank should be applying a 0% interest charge until December 31, 2022 and no principal payments are required during this time.

2. December 31, 2022:

   • For loans with a $40,000 limit – If 75% of the maximum balance is paid by this date, loan forgiveness of 25% will apply.

   • For loans with a $60,000 limit – If you repay $40,000 of the $60,000 by this date, loan forgiveness of $20,000 will apply.

     • 25 percent on the first $40,000; plus

     • 50 percent on amounts above $40,000 and up to $60,000.

     • For clarity, the portion of forgiveness based on a rate of 25% and the portion of forgiveness based on a rate of 50% are combined into a single tranche of forgiveness, which is only available if all other amounts outstanding are repaid by December 31, 2022. For example, if $60,000 is borrowed, no forgiveness is available unless $40,000 is repaid.

     • Note: some financial institutions may record your $40,000 loan and $20,000 expansion as two separate loans. For the purposes of loan forgiveness, borrowings and repayments on both loans will be aggregated.

3. January 1, 2023: Interest begins to apply to any outstanding loan amount

4. December 31, 2025: The entire loan and all accrued and unpaid interest becomes due and payable

Should you have any questions, please do not hesitate to contact us or your bank representative for further details.

Did you receive the CERB benefit? Find out what happens come tax time.

As 2020 comes to a close, many people likely didn't give much thought as to how the benefit would affect their taxes. It is time to check and see if you might owe any income tax on the emergency benefit money you received this year.

If you received the CERB benefit, the amount you received is considered taxable income and the government will be issuing you a tax slip outlining the amount to include as income for your 2020 tax return. The amount you might owe depends on how much other income you earned this year before or after you received CERB payments and what other deductions and tax credits you might have.

Another important note is eligibility. Many people are realizing that they were not actually entitled to some of the money they received, and CRA is now issuing letters to Canadians for repayment of benefits. CRA is comparing the payroll records of employers with the information of CERB claimants to ensure individuals that have returned to work and have become ineligible for the CERB repay those amounts.

Prepare for tax season

The best thing you can do is be prepared. Get as much information as you can regarding your financial situation. If you think you might owe the government, then set some money aside now so you will be prepared come spring. Here are some key points to keep in mind.

• The federal basic personal amount is $13,229 for 2020. If you received the maximum CERB amount of $14,000 (no tax was deducted from payments), then you will owe tax.

• If you had any other income in January, February or early March or you went back to work or worked part-time and had some bit of income on the side, you are going to owe tax.

• Keep in mind you may have other deductions and tax credits. The new temporary COVID -19 work-from-home tax deduction may apply to you.

• Self-employed Canadians were eligible for CERB if they made more than $5,000 net income in 2019 or within the 12 months before they applied. If you thought the $5,000 limit was gross income then you will owe tax.

If you are concerned you might need to repay CERB, please contact the CRA at 1-833-966-2099. If your CERB payment came from EI/Service Canada, please contact EI/Service Canada.

Working from home this year? New tax deduction introduced due to COVID-19

The CRA announced on Tuesday December 15, 2020, that those who worked from home more than 50 per cent of the time over at least four consecutive weeks due to COVID-19 will be eligible to claim the home office expenses deduction.

The CRA says the use of a shorter qualifying period will ensure that more Canadians can benefit from the deduction. A new temporary flat rate method will allow Canadians to claim a deduction of $2 for each day they worked from home due to COVID-19 up to a maximum of $400. In addition, Canadians will not be required to have the forms T2200 or T2200S to be signed by their employers to be eligible.

To simplify the process, CRA has launched simplified working-from-home COVID-19 tax forms (Form T2200S and Form T777S) along with a calculator to assist with the calculation of eligible home office expenses.

Please note, if you work from home and it is note due to COVID-19, you will be required to use the regular tax forms (Form T777 and Form T2200).

Detailed information can be found on the CRA website https://www.canada.ca/en/revenue-agency/news/2020/12/introducing-a-simplified-process-for-claiming-the-home-office-expenses-for-canadians-working-from-home-due-to-the-covid-19-pandemic.html