Canada Emergency Rent Subsidy and Lockdown Support Details

Posted
November 11, 2020
in

More details regarding the previously announced Canada Emergency Rent Subsidy (CERS) and Lockdown Support were revealed in early November.  The CERS will provide rent and mortgage interest support directly to tenants and property owners until June 2021 and the Lockdown Support adds a flat rate rent support to any business impacted by government shutdowns.

Many of the guidelines for CERS, including eligibility and calculations for revenue declines, mirror the updates to the Canada Emergency Wage Subsidy (CEWS).  Businesses, charities and non-profit organizations that have suffered any revenue drop compared to the same period in the previous year, are eligible for support up to a maximum of 65 percent of eligible expenses until December 19, 2020. Following this date, the subsidy will be reduced on a sliding scale. Revenue decrease and related CERS amounts are summarized in the table below:

Year over Year Revenue Decrease Rent Subsidy Amount Example
70%+ 65% 72% Revenue Decline = 65% Subsidy Rate
50-69% 40% + (% Revenue Decline -50%) x 1.25 60% Revenue Decline = 40% + (60-50) x 1.25 = 52.5% Subsidy Rate
1-49% Revenue Decline x .8 25% Revenue Decline = 25%*.8

= 20% Subsidy Rate

 

CERS Eligibility

CERS eligibility criteria generally align with the Canada Emergency Wage Subsidy program.  Eligible entities include:

  • Individuals, Taxable Corporations, Trusts, Non-profit organizations and registered charities are eligible
  • Partnerships that are up to 50 percent owned by non-eligible members
  • Non-public colleges and schools
  • Indigenous government-owned corporations that are carrying on as a business, Registered Canadian Amateur Athletic Associations, Registered Journalism Organizations

Eligible expenses are limited to those paid pursuant to written agreements entered into prior to October 9, 2020.  Expenses that relate to residential property used by the taxpayer (i.e.: a house or cottage) are not eligible. Expenses for each period are capped at $75,000 per location and a total of $300,000 shared amongst affiliated entities.  Additionally, payments made between non-arm’s length entities would not be eligible. Eligible expenses include:

  • Commercial rent
  • Property taxes
  • Property insurance
  • Interest on commercial mortgages (unless used primarily to earn rental income from arms-length sources), less any subleasing revenues

*Any sales tax (GST/HST) component of these costs would not be an eligible expense.

The program reference periods for revenue decline align with the periods from CEWS. CERS is initially available during Period 8 (Sept 27 – Oct 24), Period 9 (Oct 25 – Nov 21) Period 10 (Nov 22 – Dec 19).

Lockdown Support

If a company is eligible for the CERS and has been temporarily forced to close or has temporarily had their business activities significantly restricted by a public health order under the laws of Canada or a province or territory, they are also eligible for an additional 25% rent subsidy. The Department of Finance website contains specific examples of what may make a company eligible or ineligible for the Lockdown Support, The Lockdown Support is provided in addition to whatever CERS base subsidy rate is received. Eligible expenses are still capped at $75,000 per location, but no overall cap applies.

If you have any questions about the CERS, Lockdown Support or any other Federal COVID-19 support, please reach out to your Bateman MacKay Business Advisor.

Stay in Touch!

Sign up for our newsletter and receive tax, accounting, and COVID-19 resources for your business!


crossmenu