The CEBA website was updated to include additional document upload FAQs focused on eligible expenditures including:
calculation of “eligible non-deferrable expenses” for 2020
definition of “wages and other employment expenses to independent (arm’s length) third parties”
definition of “capital equipment used for business purposes”
definition of “payments incurred for insurance related costs”
definition of “fees required in order to maintain licenses, authorizations or permissions necessary to conduct business by the Borrower”
definition of “payments incurred for materials consumed to produce a product ordinarily offered for sale by the Borrower”
comment on dividend declaration
The new questions are as follows:
How do I calculate “Eligible Non-Deferrable Expenses” for the 2020 calendar year?
The applicant’s total incurred and projected Eligible Non-Deferrable Expenses, used to determine whether such expenses are between $40,000 and $1.5 million, are measured as they stood on March 1, 2020. Under all expense categories, the amounts to be included in the total are those actually paid in January and February 2020, as well as those for which a legal or contractual obligation existed on March 1, 2020, for the applicant to pay the expense within the remainder of 2020 and which cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID. For periodic or indefinite contracts that renew or continue with the passage of time absent intervention by the parties, such as a monthly phone contract, assume that the contract continues on the same terms beyond March 1 such that payments related to the later periods in 2020 are included as obligations provided for in contract as at March 1.
For example, assume your business signed an insurance policy on February 1, 2020. As at March 1, the business had paid the monthly insurance expense for February and a contractual obligation then existed providing for payments of the expense for the subsequent months of 2020. All 11 monthly insurance payments would be included in the total Eligible Non-Deferrable Expenses.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
What qualifies as “wages and other employment expenses to independent (arm’s length) third parties”?
Wages and other employment expenses to independent (arm’s length) third parties includes payments on account of employees – e.g. salary, employment insurance premium, benefits (e.g. pension, medical/dental), or bonuses.
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
What qualifies as “capital equipment used for business purposes”?
Capital equipment used for business purposes includes, machinery, computer equipment, furniture, and other durable equipment (e.g. vehicle, tractor, marine vessel).
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
What qualifies as “payments incurred for insurance related costs”?
Insurance related costs pertaining to items such as property, professional liability, vehicle, and business interruption are considered eligible non-deferrable expenses so long as the insurance coverage protects the business entity.
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
Fees required in order to maintain licenses, authorizations or permissions necessary to conduct business include, professional dues for licensed professionals, fishing licenses, and taxi medallions. This expense category may also include payments for the use of intellectual property (e.g. software licensing and subscriptions) and patent fees to the extent that it is required to conduct business.
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
Payments incurred for materials consumed to produce a product ordinarily offered for sale by the Borrower reflects payments for input materials that are consumed or transformed in producing, or become part of, the product that is ordinarily offered for sale, such as raw materials, ingredients, supplies, seed or livestock feed. Finished goods’ inventory or purchases of capital assets are not included.
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID. In addition, expenses for livestock feed are considered “Eligible”.
CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
Can I claim dividends I paid or will pay in 2020 as an Eligible Non-Deferrable Expense?
Dividends are not an Eligible Non-Deferrable Expense.