Canada Emergency Business Account Eligibility Expansion

On May 19th, the Federal Government announced an expansion of the eligibility criteria regarding the Canada Emergency Business Account (CEBA).  These expanded CEBA qualification criteria will operate to effectively include numerous additional owner-operated small businesses.  Under the prior CEBA regime, businesses were required to have a minimum of $20,000 in payroll in order to be eligible for CEBA.  Under the updated CEBA regime, the following types of businesses may now be able to qualify for CEBA:

1. Sole proprietors receiving income directly from their businesses,
2. Businesses that rely on contractors, and
3. Corporations that opt to compensate key shareholder-employees through dividends rather than payroll

For CEBA qualification purposes, businesses with payroll of less than $20,000 must have:

1. A business operating account at a participating financial institution
2. A Canada Revenue Agency (CRA) business number
3. Filed a 2018 or 2019 income tax return
4. Eligible non-deferrable expenses between $40,000 and $1.5 million.

Such “non-deferrable” expenses could include costs such as rent, property taxes, utilities and insurance.  Also note that these expenses will be subject to verification and audit by the Government of Canada.

More details concerning the updated CEBA rules, including application information and information concerning eligible non-deferrable expenses and other details, are expected shortly.