Qualifying businesses affected by the ongoing COVID-19 pandemic will have rent and mortgage support until June 2021 through the Canada Emergency Rent Subsidy (CERS). The CERS replaces the Canada Emergency Commercial Rent Assistance (CECRA) program, which provided rent support of over $1.8 billion to over 130,000 small businesses across the country.
The Canada Emergency Rent Subsidy (CERS) Explained
Canadian businesses, charities, and not-for-profit organizations who have experienced a drop in revenue due to the COVID-19 pandemic may qualify for the Canada Emergency Rent Subsidy (CERS). This financial support will help qualifying organizations by allowing them to subsidize a percentage of their expenses, up to a maximum of 65 percent until the 19th of December, 2020. The Canada Revenue Agency (CRA) will be administering the CERS and will provide benefits directly to renters, without requiring the participation of their landlords.
To qualify for the CERS, organizations must:
- Possess a payroll account as of March 15, 2020
- Possess a valid business number as of September 27, 2020
- Ensure that their claim for the rent subsidy is a bona fide claim, as per Canada Revenue Agency (CRA) rules and regulations.
Depending on the amount of revenue decline by a qualifying organization, the base subsidy rate will vary. The rate can be calculated as follows:
|Revenue Decline||Base Subsidy Rate|
|70% and above||65%|
|50% to 69%||40% + (% of revenue decline – 50%) x 1.25|
|1% to 49%||% of revenue drop x 0.8|
Regarding the base subsidy, $75,000 is the maximum amount of qualifying rent expenses which can be claimed for each qualifying period per location. $300,000 is the maximum amount of qualifying rent expenses which can be claimed for the affiliated group of entities for each qualifying period. The maximum subsidy amount, per affiliated group of entities per qualifying period under the base subsidy, is $195,000.
For additional in-depth details about eligibility requirements and how to apply, please refer to the latest news release found on the Government of Canada website linked below
Lockdown Support Explained
The Canada Emergency Rent Subsidy (CERS) also includes an additional 25 percent of Lockdown Support for businesses that have to close or significantly limit how they operate under new or existing public health orders issued by the Government of Canada, or a province or territory (including health orders issued by a regional health authority or municipality).
Qualifying organizations have the ability to make claims retroactively from September 27th to October 24th, 2020. This means organizations hit hardest by the COVID-19 pandemic could receive up to 90 percent in combined rent support.
As it relates to the Lockdown Support, $75,000 is the maximum amount of qualifying rent expenses which can be claimed for each qualifying period per location. As for an affiliate group of entities, there is no cap which applies. $18,750 represents the maximum Lockdown Support available per location for each qualifying period with no limit for the amount of Lockdown Support for an affiliated group.
For additional in-depth details about the Lockdown Support, please refer to the latest news release found on the Government of Canada website linked below.
If you have questions regarding the Canada Emergency Rent Subsidy or any pre-existing relief program, please contact a member of the EPR Maple Ridge Langley team at firstname.lastname@example.org.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.