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Canada Emergency Rent Subsidy

POSTED November 24, 2020 BY Yuri Kostowskyj Blog

Eligible businesses can now apply for the Canada Emergency Rent Subsidy (CERS). The CERS is retroactive to September 27, 2020 and is scheduled to last until June 2021. CERS will provide qualifying renters and property owners that have experienced a drop in revenue with direct support to cover part of their rent or property expenses.  The legislation only provides details of the CERS program until December 19, 2020 and the CERS program generally follows the Canada Emergency Wage Subsidy (CEWS) program, including the sliding scale of subsidy based on revenue decline.  Businesses that are currently eligible to claim CEWS should qualify for CERS assuming they are incurring eligible expenses.

The CERS will apply to eligible expenses up to $75,000 per period per business location with an overall expense limit of $300,000 per period that must be shared amongst affiliated entities.  Eligible expenses include:

  • Rent and other expenses required to be paid under a net lease, including base rent, operating expenses, property tax, and other ancillary services.
  • Interest on commercial mortgages (with some limitations), property insurance, and property taxes.

Expenses paid to non-arms length entities do not qualify for CERS.

The details for the CERS for the first three periods have been released and eligible businesses that have experienced a revenue decline will be eligible to claim CERS on up to 65% of their eligible expenses as follows:

  • Revenue decline of 70% or more – 65%
  • Revenue decline of 50% to 69% – 40% plus (revenue decline – 50%) x 1.25%  (e.g. 40% +(65% revenue decline – 50%) x1.25 = 58.75%)
  • Revenue decline of 1% to 49% – revenue decline x .8  (e.g. 35% revenue decline x .8 = 28%)

Businesses that are forced to close or have their activities significantly restricted by government authorities due to COVID-19 will be eligible for an additional 25% subsidy if they already qualify for the CERS.

The revenue decline can be determined by using the general approach or the alternative approach.  Once a method is determined it must be used for each of the three periods.

Qualifying period General Approach Alternative Approach
Sep 27 to Oct 24, 2020 Oct 2020 over Oct 2019 or

Sep 2020 over Sep 2019

 Oct 2020 or Sept 2020 over average of Jan and Feb 2020
Oct 25 to Nov 21, 2020 Nov 2020 over Nov 2019 or

Oct 2020 over Oct 2019

 Nov 2020 or Oct 2020 over average of Jan and Feb 2020
Nov 22 to Dec 19, 2020 Dec 2020 over Dec 2019 or

Nov 2020 over Nov 2019

 Dec 2020 or Nov 2020 over average of Jan and Feb 2020

You can read more about the CERS here:  https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html

Please contact your Fruitman Kates LLP advisor if you have any questions about CERS or need assistance with claiming it.