CRA Clarifies Canada Emergency Rent Subsidy

Posted
December 15, 2020
in

The Canada Revenue Agency (CRA) recently held an online question and answer period to help business owners and their advisors understand the details of the Canada Emergency Rent Subsidy (CERS) and clarify any specific concerns regarding the program. The information below is the most relevant and useful information from that session. If you have any questions about the CERS program and if your company may be eligible, please contact your Bateman MacKay Business Advisor.

Eligible Expenses           

Q: My eligible expenses are payable but have not been paid yet. Can I claim the subsidy for these amounts?

  • A: Eligible expenses payable but not paid in a claim period are allowed to be claimed. However, these expenses must be paid within 60 days from the end of the applicable CERS period to be allowed.

Q: I paid eligible expenses for the claim period before the start of the claim period (i.e. prepaid rent, pay property insurance annually). Is this amount eligible for the subsidy?

  • A: Yes, as it has been paid.
  • The CRA calculator can help allocate the payments into the appropriate CERS claim period.
  • Payments must be allocated over the CERS claim periods. A payment related to multiple CERS periods cannot be claimed as a lump sum in one CERS period.

Lockdown Support

Q: What are the eligibility requirements for the additional 25% Lockdown Support?

  • A: Requires one or more locations to be temporarily closed.
  • If restrictions (including, but not limited to the list below) are in place but the location is still open, it does not qualify.
    • Restricted amount of patrons in a restaurant.
    • Travel restrictions that reduce the number of customers.
    • Rules about how you can perform business activities (i.e. reduced hours of operation).
    • Restrictions that do not specifically order you to stop an activity (i.e. reduced seating capacity or other physical distancing strategies).
  • A location does not qualify if it is closed due to failure to comply with a previous public health order.

Corporate Structure

Q: I own my business’ building in a separate corporation. Am I eligible for the rent subsidy?

  • A: Rent paid by an Operating Company (OpCo) to a related Property Company (PropertyCo) is considered non-arm’s length and is not eligible for the subsidy.
  • Eligible expenses paid by PropertyCo (i.e. commercial mortgage interest, property taxes, property insurance) for a building used by OpCo in active business may be eligible if the OpCo is experiencing a revenue drop from active business. This requires an election to be made on PropertyCo’s CERS application.
  • OpCo can claim property taxes, utilities and insurance paid if they have a net lease arrangement with the PropertyCo.

Verification

Q: What is the verification process for CERS?

  • A: Applications are processed through an automatic verification system using existing data the CRA already holds.
  • Typical processing takes three to eight days and direct deposit allows you to obtain funds fastest.
  • CRA may contact applicants to verify/request information before the subsidy is processed.

Application Error

Q: I made an error when I applied for CERS. How do I correct it?

  • A: See After you apply for how to return CERS funds if you have accidentally claimed too much.
  • Applicants are unable to amend applications at this point in time (i.e. you accidentally understated your original claim). The ability to amend will be available at a future date.

Stay in Touch!

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


crossmenu