We wanted to provide a quick update on two programs that have expanded in scope, and possible issues you may run into.

CERB (Canada Emergency Response Benefit)

The CERB was introduced early in 2020 and represented a payment of $2,000 per month to individuals who applied.

Applications for this program were approved without oversight. That oversight has started now, and in true government fashion isn’t being explained well.

In order to qualify for CERB, you had to have (among other criteria) earned either $5,000 before tax in 2019, or in the preceding 12 months (a period which ended during 2020). You didn’t have to have earned $5,000 in 2019, so if for example your self-employed business (or job) had just started to pick up in early 2020, you may have hit the $5,000 threshold in 2020.

CRA has started reviewing tax returns they received for 2019, and if your income for 2019 was under $5,000, they’ve started sending letters saying:

As we do with all tax and benefit information we receive, we are reviewing applications for the CERB
to make sure that people who received this benefit were eligible for it.
To be eligible for CERB, you must have earned employment or self-employment income of at least
$5,000 in 2019 or in the 12 months before the date of your application.
Based on the records we have at this time, we cannot confirm that you meet this requirement.

If you receive this letter, but reached the $5,000 threshold under the 12 month rule, you don’t need to do anything. The letter is simply warning that based on the information they have so far (whcih doesn’t include your 2020 taxes) you may not qualify.

CEBA (Canada Emergency Business Account)

If your business qualified for the $40,000 CEBA loan earlier in the year, Canada had announced that there would be an additional $20,000 made available to “eligible businesses”. This was assumed to have criteria (along the lines of some sort of revenue decline, industry test, etc.).

Turns out the “criteria” is that you qualified for the first $40,000 loan.

If you qualified for the first $40,000 loan, you can now apply for the additional $20,000 loan. In total, you will receive $60,000, of which $40,000 needs to be paid back by December 31, 2022. Once you’ve paid back the $40,000, the other $20,000 is forgiven and would be taxable income at that point.

If you haven’t yet applied, you can now apply until March 31, 2021.

Should you have any further questions, please contact us.