*This program ended on October 23, 2021. For information on new employer support programs, please refer to our blog here.
The Federal government’s Canada Emergency Rent Subsidy (CERS) program opened for applications on November 23, 2020. It replaces the previous Canada Emergency Commercial Rent Assistance Program (CECRA).
Businesses, non-profits, and charities that have seen a decline in their revenues due to the pandemic, can apply for the subsidy to cover their commercial rent or property costs. Under CERS, they can receive support of up to a maximum of 65 per cent of eligible expenses until June 5, 2021.
Under the previous CECRA program, only commercial property owners could apply for forgivable loans to cover rents on behalf of eligible small business tenants. But the new program allows small business tenants to directly apply for the subsidy payments.
The 2021 federal budget extended the rent subsidy and lockdown support until September 25, 2021.
The government will also gradually decrease the rate of the rent subsidy, beginning July 4, 2021, to ensure an orderly phase-out of this program as vaccinations are completed and the economy reopens.
How does the Canada Emergency Rent Subsidy work?
Businesses that have experienced loss in revenues of up to 70 per cent or more, would be eligible for 65 per cent rent subsidy in a particular claim period. The subsidy rate for every applicant is calculated using formulas and is based on a sliding scale. The subsidy rate goes down with decline in percentage of revenue loss.
The CERS program is administered by the Canada Revenue Agency and will run till June 5, 2021. Claim period 1 is backdated to September 27, 2020. Eligible businesses must apply to the subsidy within 180 days after the end of a claim period.
The CERS program includes an additional 25 per cent subsidy for businesses forced to temporarily close or restrict their services due to a mandatory public health order. This lockdown support is not calculated on a sliding scale. To be eligible, a business must have suffered at least 25 per cent revenue decline (compared to a pre-pandemic reference period) due to the public health directive.
On February 24, 2021, the government introduced a proposed change to make lockdown support available to an eligible property owner whose tenant is not at arm’s length but makes use of the qualifying property that is under a lockdown. The proposed amendment would apply as of September 27, 2020.
If this amendment affects you, you can change a previously submitted application.
On May 20, 2021, the lockdown support eligibility criteria was further updated. To qualify for lockdown support, you must have:
- A base rent subsidy rate of more than 0% for the claim period
- One or more locations temporarily closed, or have activities majorly limited for a week or longer due to a COVID-19-related public health order
- The minimum lockdown period can span across two different claim periods
How do I know if my business is eligible for CERS?
To qualify for the rent subsidy, you must be:
- An eligible entity, such as an individual, non-profit organization, taxable corporation or trust, registered charity, partnership consisting of eligible employers
- Own or rent a qualifying property and have seen a decline in revenue due to the pandemic
- Have at least one of the following:
- A CRA business number on September 27, 2020, or
- A payroll account on March 15, 2020
Tenants whose landlords applied for CECRA are still eligible for CERS.
What properties qualify for CERS?
Any buildings or land that a particular organization owns or rents and uses for day-to-day business in Canada is eligible.
However, residential property or any owned properties primarily used to make rental income from arm’s length parties (where the entities involved are independent of each other) do not qualify.
Is there an eligibility criterion for expenses?
The expense should be within the timeframe of the claim period and be paid or payable to an arm’s-length party.
The rent agreement should be in writing and in place before October 9, 2020.
What expenses can I claim under the program?
Eligible expenses for renters include commercial rent, customary operating expenses (payable by renter), property tax and similar taxes and payments for customary ancillary services.
Ineligible expenses include sales taxes (GST/HST), damages, and interest or penalties on pending amounts.
Eligible expenses for property owners include property and similar taxes, property insurance, interest on commercial mortgages for the purpose of purchasing real property. The mortgage amount should not exceed lesser of:
- the lowest principal amount secured by one or more mortgages on the property when acquired
- the cost of the property
Payments between non-arm’s length entities and/or made outside the claim period are not eligible.
Any revenue earned by property owners from sub-leasing property to arm’s length parties must be deducted from eligible expenses.
Eligible applicants can claim expenses up to $75,000 per business location. There is an overall limit of $300,000 per claim period.
How do I apply?
Eligible organizations must submit separate applications for each CERS claim period. Businesses can apply using My Business Account on the CRA website. Business representatives can also apply using Represent a Client.