CEBA: Collection Process

Posted on October 25th, 2024 in Domestic Tax

Closeup of person in business suit and another second set of hands exchanging paper work.

Where borrowers cannot repay their CEBA loan in full when it becomes due, the loan may be assigned from the taxpayer’s financial institution to the CEBA program for collection. CRA is assisting with the collection of loans that are assigned and began said work in the Spring of 2024. Loans may have been assigned if they are in default for reasons such as:

not repaying the principal or interest when due;
becoming insolvent; or
failing to observe the terms of the loan.

When a loan is assigned, a loan assignment notice will be mailed to the taxpayer containing details on how to make payments and how to set up a payment arrangement with CRA. A 12-digit CEBA identification number commencing with “967” will be issued for use in registering for a CEBA portal account. The portal provides information on the outstanding balance, the payment arrangement, payment history, charge history, monthly statements, and contact information. Payment and charge history for only the period that commenced with the assignment to the CEBA program is available on the portal.

While CRA may contact the taxpayer to set up a payment arrangement, taxpayers may also initiate communications by contacting the CRA CEBA contact centre (1.800.361.2808) once the loan assignment notice has been issued.

Payments made to an assigned CEBA loan are applied in the following order:

fees outstanding;
interest outstanding;
principal outstanding; and finally
interest accrued.

Authorized third parties, such as a family member, accountant, or lawyer, can request information about the loan through the general CEBA call centre (1.888.324.4201), but they cannot access the loan or sign into the taxpayer’s CEBA portal account. To authorize new third parties or manage existing third parties, the taxpayer must contact the CRA CEBA contact centre.

The CEBA program also provided the following guidance in respect of changes to an entity’s business.

Business closure – Taxpayers must repay the loan even if the business is closed.
Ownership change – The impact of a change in ownership of the borrower depends on the business’s legal structure (e.g. whether the business is a sole proprietor or a corporation) and the type of ownership change. The general CEBA call centre should be contacted for more information once loans are assigned.
Insolvency – The CEBA FAQ stated that the CEBA program cannot provide insolvency advice.
Bankruptcy/consumer proposal/ receivership – If a business has filed for bankruptcy, the appointed licensed insolvency trustee can contact the CEBA call centre. The process for entering into payment arrangements does not apply to insolvent taxpayers.

Ensure that a reasonable repayment schedule is established if satisfying the full outstanding CEBA loan immediately is problematic.

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Article originally published in: Tax Tips & Traps 2024 Third Quarter – Issue 147.