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Canada Emergency Rent Subsidy CERS Updates

Dear Valued Clients and Friends,

As we have been receiving numerous enquiries regarding the new Canada Emergency Rent Subsidy (CERS) program, we would like to provide you with another summary of what the support entails.

Similarly, to the Canada Emergency Wage Subsidy (CEWS), we believe that the potential funding can be lucrative in keeping your business afloat during these tumultuous times.

In October 2020, the Federal Government introduced the CERS program to assist businesses with their rent and other correlated outlays. Unlike the previous Canada Emergency Commercial Rent Assistance (CECRA) program, support from CERS is provided directly to qualifying tenants and property owners, without requiring the involvement of landlords.

Included below are resource links that we recommend you refer to periodically. The government is continuously monitoring the needs of all businesses, and we expect numerous modifications and clarifications will be provided in the near future.

Who Is Eligible? Tenants include individuals, taxable corporations and trusts, non-profit organizations, and registered charities. A revenue drop must be experienced by comparing the eligible revenue during the reference period with the eligible revenue from a previous period. All revenue drops qualify, and the rate of the drop will determine the amount of subsidy that will be received.

How Can I Apply? Claims can be submitted through the CRA Business Account. A new CERS (ZA) number must be created, similar to the Payroll (RP) account.

What Are The Applicable Periods? Applications are currently only open for Claim Period 1. Note that tenants must submit an application within 180 days of the last day of the claim period.

-> Claim Period 1: September 27, 2020 – October 24, 2020

-> Claim Period 2: October 25, 2020 – November 21, 2020

-> Claim Period 3: November 22, 2020 – December 19, 2020

-> Claim Period 4: December 20, 2020 – January 17, 2021

-> Claim Period 5: January 18, 2021 – February 15, 2021

-> Claim Period 6: February 16, 2021 – March 15, 2021

-> Claim Period 7: March 16, 2021 – April 12, 2021

Claim Period 8: April 13, 2021 – May 10, 2021 Claim Period 9: May 11, 2021 – June 7, 2021

What Types Of Properties Are Eligible? Qualifying properties include any “real or immovable property” (buildings or land) in Canada that your business owns or rents and uses in the course of your ordinary business activities. There must be a written agreement in place before October 9, 2020.

What Expenses Can Be Claimed? If you rent the property, eligible expenses include rent, property taxes, and regular customary ancillary services. For those who own the property, eligible expenses include property taxes, property insurance, and interest on commercial mortgages (unless the main use of the property is to earn, directly or indirectly, rental income). Not included are your home, cottage, or any properties that are primarily used to earn rental income from arm’s-length parties.

Is There A Maximum Amount That Can Be Claimed? Yes. Eligible expenses are capped at $75,000 per location and $300,000 in total for all locations (including those claimed by affiliated companies) per claim period.

How Much Subsidy Will Be Received? The amount of subsidy received will be based on the revenue decline. The base subsidy rate can be determined by using the calculator tool that is available on the CERS website.

-> Revenue Decline of 70% and Over: Base Subsidy Rate is 65%
-> Revenue Decline of 50% to 69%: Base Subsidy Rate is 40% (Revenue Drop - 50%) x 1.25
-> Revenue Decline of 1% to 49%: Base Subsidy Rate is Revenue Drop x 0.8

Is There Additional Support Available? Yes. For businesses that were mandated by public health orders to temporarily shut down for one week or longer, there is a Lockdown Support of 25% of eligible expenses per affected location. The rate applies to a maximum of $75,000 in eligible expenses per location and is pro-rated based on the number of days your business was directed to close.

What Is The Tenant Disclosure? Businesses who plan on paying their landlord subsequent to receiving the subsidy must provide the CRA with a Tenant Attestation stating that payment will be made within 60 days of receipt of the funds.

Resource Links:


https://www.canada.ca/en/department-finance/news/2020/11/lockdown-support-for-businesses- facing-significant-public-health-restrictions.html

As your accounting and tax service providers, it is our goal to assist you during these unpredictable times. We are here to support you with CERS and other government relief programs being offered

Stay safe and well.

Prasad & Company LLP

This newsletter and the details provided are solely shared for informational purposes and does not constitute legal, tax, or financial advice or opinions. Please do not hesitate to contact your manager for assistance regarding CERS or any other government programs.

If you have any questions, you can reach us at:

(416) 226-9840 or
1 (888) 550-8227

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