November 10, 2020
The Canadian Emergency Rent Subsidy (CERS) has been introduced by the Federal Government as a means to provide additional support to Canadian Businesses as they continue to navigate through the financial impacts of COVID-19.
So far the government has provided details around the first 12 weeks of the program. Like CEWS the claim periods will consist of 4 week periods and those periods will align with CEWS. As a result, the first period is actually called Period 8 and it aligns with Period 8 of CEWS. Also similar to CEWS the program will extend to June 2021, although we do not have details on how the subsidy will be calculated beyond the next 12 weeks.
How is the rent subsidy calculated? The subsidy rate will vary depending on how much revenue decline you have experienced in the period. If you are already claiming CEWS you will calculate CERS exactly the same way with the same considerations being constant, namely:
You get to choose between the same month prior year, or the prior reference period (Jan/Feb avg.). You have to remain consistent and can’t change options each month
The ‘deeming rule’ is in place – which means you are able to choose the decline that is most advantageous using this month or last month. (So if you decline in October is 20% and your decline in Sept was 25% you will be able to base your claim on the 25% decline).
How do you calculate the subsidy?
The math is tiered as follows:
If your decline is 70% or greater you’ll max out at 65%
If your decline is between 50-69% the subsidy will equal 40% plus your Decline minus 50% multiplied by 1.25 (so a 60% drop equals a 52.5% subsidy)
If your decline is less than 50% you’ll multiple the decline by .8 (so a 20% drop is 16% subsidy).
There is a maximum limit of $75k/claim and $300k in total among all affiliated entities (in the event you have a group of companies operating under a parent)
As of the date of writing this I don’t believe this has been enacted into Law (nor has the CEWS changes) so this is the best understanding we have at the moment and our intention is to keep up to date as best we can as information is received.
As always, if you need additional financial support during this difficult time please do not hesitate to reach out. This is still not business as usual for any of us and I appreciate we are all making our best efforts to make sound business decisions during these unprecedented times.