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Last updated: Mar. 11, 2021
The federal government has launched a new rent relief program for small businesses impacted by COVID-19.
Below is a summary of the program.
What is the Canada Emergency Rent Subsidy?
The Canada Emergency Rent Subsidy (CERS) program provides rent and mortgage support to qualifying businesses, charities and non-profits. The subsidy covers eligible fixed property expenses, including rent. CERS replaces the Canada Emergency Commercial Rent Assistance program (CECRA). A key change in the new program is that CERS can be claimed directly by qualifying small business tenants, unlike CECRA, which was only available to property owners. The new program is administered by the Canada Revenue Agency and the Canada Mortgage and Housing Corporation.
The amount of CERS support you receive is taxable and must be included as taxable income on your corporate tax return.
How does it work?
The new rent subsidy is structured like the Canada Emergency Wage Subsidy. It’s available on a sliding scale to business owners, with the amount your business receives proportional to your revenue loss. For example: if your business experienced a revenue drop of 70% or more compared to pre-pandemic levels, you could receive a subsidy of up to 65% for eligible expenses.
There’s also another layer of support for businesses whose revenues have dropped and have had to close their doors or limit their activities due to public health orders. If your business qualifies, it could receive an additional 25% of rent support, which could mean a rent subsidy of 90%. The rent subsidy would be available retroactive to September 27, 2020, until June 2021.
Click here for a graph that details the subsidy rate structure.
What are eligible expenses?
The program covers fixed property expenses, which includes:
- Commercial rent
- Property taxes (including school taxes and municipal taxes)
- Property insurance
- Interest on commercial mortgages (subject to limits) for a qualifying property, less any subleasing revenues
Expenses for each qualifying period would be capped at $75,000 per location and an overall cap of $300,000 shared among entities. The sales tax (e.g., GST/HST) component of these costs would not be an eligible expense.
How do I apply?
1. Sign into your My Business Account or Represent a Client account. Review your mailing address and other contact information, and make sure your business number is valid.
2. Create a CERS number. Look for the “Create a CERS number” section in My Business Account or Represent A Client.
3. Gather the information you’ll need to calculate and apply for the subsidy.
What information do I need to collect?
For each qualifying property, you will need the:
- Amounts you owe or have paid for all eligible expenses
- Property address
- Name and contact information of your:
- Mortgage holder if you have a mortgage on the property or
- Landlord if you rent the property
The application form will accept information for up to 3 properties. If you have more than 3, enter information for the 3 properties with the highest eligible expenses. Keep the information for all properties in your records in case the CRA asks for it at a later date.
4. Use the CERS online calculator to calculate the subsidy amount you can claim.
5. You must submit a separate application for each CERS claim period, and your application must be filed no later than 180 days after the end of a claim period.
If you clear the CRA’s automated verification system, and are registered for direct deposit, you should expect to begin receiving the payments by December 4th. Direct deposit payments will take about 3-8 days, while a cheque will take about 14 days.
Who can apply?
Your business must meet the following 4 criteria:
1. In this section of the criteria, your business must meet one of the following conditions:
- You had a CRA business number on September 27, 2020 OR
- You had a payroll account on March 15, 2020, or another person or partnership made payroll remittances on your behalf OR
- You purchased the business assets of another person or partnership who meets condition 2 above, and have made an election under the special asset acquisition rules. These special asset acquisition rules are the same for the Canada Emergency Wage Subsidy (CEWS). OR
- You meet other prescribed conditions that might be introduced (Note: there are no prescribed conditions at this time).
2. You run an eligible business, charity, or non-profit (eligible entity).
3. You have experienced a drop in revenue:
- Your drop in revenue is calculated by comparing your eligible revenue during the reference period with your eligible revenue from a previous period (baseline revenue).
- There is no minimum revenue drop required to qualify for the subsidy. The rate your revenue has dropped is only used to calculate how much subsidy you receive for these periods.
4. You have eligible expenses: Only certain expenses you pay for qualifying properties are eligible for CERS.
What is the total my business can claim?
You can claim up to $75,000 per business location (base and top-up), and $300,000 in total for all locations (including any amounts claimed by affiliated businesses).
Contact FBC
If you’d like to learn more about this or other COVID-19 programs for Canadian businesses, please call us at 1-800-265-1002 or email fbc@fbc.ca. Unlimited consultation related to tax matters is a key benefit of FBC Membership. You can also book an appointment. Visit our COVID-19 Resource Centre for the latest information, advice and insights for small business owners.
