The Canadian Emergency Rent Subsidy (CERS) is now open for business. The Government has been receiving very strong feedback on previous mechanisms that were attempted in the hopes they would alleviate the burden of rent. As the community works together to try and limit the spread of COVID-19, commercial rent continues to be a large factor in a business' cash flow. The new CERS has borrowed many elements from the Canadian Emergency Wage Subsidy (CEWS) in order to provide a program that attempts to match the impact to the business by scaling based on the revenue decline suffered.
CERS has been created very similarly to CEWS in that the following considerations apply to both now:
Any revenue decline experienced in the comparable periods will result in at least some form of subsidy
You compare to either the prior year or to the Jan/Feb 2020. The method you choose here is the same method chosen for CEWS.
The maximum subsidy (if you were not forced into lockdown) is 65% and the math to calculate the subsidy is essentially the same as the math to calculate the CEWS subsidy.
The ‘deeming rule’ is similarly applied meaning you measure your eligibility using the current month or the prior month and compare both to their respective previous periods and then get to select the revenue drop that is the greatest to calculate the subsidy rate.
However there are a few extra considerations under CERS:
There is an additional lockdown support rate for certain locations affected by public health restrictions as long as the base rent subsidy is more than 0%. The lockdown support rate is 25% multiplied by the number of days you are on lockdown divided by 28 days (the days in the CERS period).
There is a maximum claim of $75,000 per business location and $300,000 in total for all locations (including affiliated businesses)
There is no maximum for the top-up subsidy portion for those businesses impacted by lock down
There is a deadline of filing a claim no later than 180 days after the end of a claim period
What expenses can you claim?
You can only claim rent for a period in the claim period. If you haven’t yet paid the rent you can still claim it as long as you attest (promise) to pay it within 60 days
You need a written rental agreement to support the claim (dated before Oct 9, 2020).
You can’t claim expenses to non-arm’s length entities
If you own your own property you can claim your property and similar taxes, property insurance and interest on commercial mortgages
Note – if you earned any revenue from sub-leasing the space you have to subtract that from your eligible expenses
To apply for your first CERS claim you can go directly to CRA’s website and follow their user friendly steps to calculate your claim.
As always, we will do our best to provide our clients with the required COVID-19 support as needed.