[November 24, 2020]
As the country continues to fight the second wave of the COVID-19 pandemic, small businesses are continuing to struggle with tightened restrictions and closures.
In response, the federal government has implemented the Canada Emergency Rent Subsidy (CERS) to replace the Emergency Commercial Rent Assistance (CECRA) program that ended on September 30.
CERS will cover a portion of rent or property expenses for eligible Canadian businesses, non-profit organizations, or charities who have experienced a loss of revenue. This subsidy is available from September 27, 2020 to June 7, 2021 and covers 9 claim periods.
The subsidy is available on a sliding scale depending on revenue loss of up to 65%, with a top-up of up to 25% should the business be ordered to close due to a public health order for a week or more.
Unlike the CECRA, participation of landlords is not required and payments are provided directly to renters and property owners.
In order to help you gain an understanding of this new subsidy and how it could benefit your business, we’ve put together an overview.
CERS Eligibility
To qualify for CERS, you must meet the following 4 conditions:
1. One of the following:
- You have a CRA business number on September 27, 2020; OR
- You have a payroll account on March 15, 2020 or are using a payroll service provider, and have a CRA business number; OR
- You’ve purchased business assets of another person or partnership and qualify under the same special asset acquisition rules as CEWS.
2. You are an eligible business, non-profit, or charity:
- Individual
- Taxable corporation or trust
- Registered charity
- Partnership of eligible employers
- Non-profit organization
- Prescribed organizations
3. You experienced a drop in revenue during the claim period compared to a previous period (no minimum).
4. You rent or own a property that is real or immovable, and is used by your business in Canada. Personal residences and rental income properties are not eligible.
CERS Claim Periods
There are 9 claim periods during that are currently covered by this program. Here’s a breakdown of them along with the corresponding Canada Emergency Wage Subsidy (CEWS) period:
| CEWS Claim Period | CERS Claim Period | Dates |
|---|---|---|
| 8 | 1 | Sept 27 - Oct 24 |
| 9 | 2 | Oct 25 - Nov 21 |
| 10 | 3 | Nov 22 - Dec 19 |
| 11 | 4 | Dec 20 - Jan 17, 2021 |
| 12 | 5 | Jan 18 - Feb 15 |
| 13 | 6 | Feb 16 - Mar 15 |
| 14 | 7 | Mar 16 - Apr 12 |
| 15 | 8 | Apr 13 - May 10 |
| 16 | 9 | May 11 - Jun 7 |
CRA will begin processing claims on November 30.
Expenses that can be claimed through CERS
As a renter, here are the expenses you can claim:
- Rent
- Regular payments for operating expenses, such as insurance, utilities, common area maintenance, etc.
- Property and similar taxes
- Regular payments to the lessor for customary ancillary services (i.e. parking fees)
Items that do not qualify to be claimed included sales tax, damages, interest or penalties, or other special fees.
If your landlord has applied a CECRA amount to your upcoming rent, you are still able to apply based on your full rent amount.
As a landlord, you are able to claim the following expenses:
- Property and similar taxes
- Property insurance
- Interest on commercial mortgages for the purpose of purchasing real property
All expenses must be paid within the claim period to be eligible. Payments between non-arm’s-length entities are ineligible.
Calculating your subsidy amount
There are two parts to the subsidy: the base amount and the lockdown support amount.
Base amount
The base amount applies to a maximum of $75,000 per location, with a total maximum of $300,000 for all affiliated entities per claim period.
Similar to CEWS, to calculate your revenue drop, you may compare revenue year-over-year using the corresponding month in the previous year, or the alternative method of comparing revenue to your revenue in January and February 2020.
| Your Revenue Drop | Subsidy Rate |
|---|---|
| Revenue drop of 1-49% | 0.8 x revenue drop % |
| Revenue drop of 50-70% | ((Revenue drop % - 50%) x 1.25) + 40% |
| Revenue drop of 70% or more | 65% |
Lockdown support top-up
The lockdown support top-up is available should your business be ordered to close or cease certain activities by a public health order. If your business is affected by at least one week, you may receive additional support of up to 25% of eligible expenses. This applies for each location that is impacted.
The lockdown top-up is calculated as:
Top-up = 25% (fixed rate) x # days location was closed / 28 days in the CERS period
So if your business was closed for 14 days, your top-up would be 25% x 14/28 = 12.5%
A calculator is available to determine your subsidy amount.
How to apply
Applications are processed directly through the CRA using the My Business Account portal. You will be required to set up a CERS (ZA) number before you apply through your account.
You must apply separately for each claim period. Claims must be submitted within 180 days of the end of the claim period.
Once your claim has been submitted, payment will be made within 3-8 days if you’ve signed up with direct deposit.
Our team is here for CERS Support
Working through the calculations and tracking your revenue for comparisons can be daunting. If you’re a client, please reach out to your Client Success Lead to discuss how we can support your CERS applications.
If you’re not already a client and could use bookkeeping and CERS support, we’d love to hear from you.
