Canada Emergency Rent Support (CERS):
- The new CERS provides rent and mortgage support until June 2021 (as the previous program CECRA ended on September 26, 2020).
- The rent subsidy would be provided directly to tenants and would support qualifying organizations that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 per cent of eligible expenses (until December 19, 2020, the rate is expected to change for periods after that date).
- See table below that summarizes the subsidy structure:
Revenue Decline | Base Subsidy Rate |
70% and over | 65% |
50% to 69% | 40% + (revenue drop – 50%) x 1.25 |
1% to 49% | Revenue drop x 0.8 |
Eligible expenses: Include commercial rent, mortgage interest (subject to limits), insurance, property taxes paid by commercial property owners up to a maximum of $75,000 per location. Any sales tax (i.e. GST/HST) of these costs would not be an eligible expense.
The Government also affirmed its intention to formalize rent payable (not yet paid) as an eligible expense.
Limitations:
- Payments made between non-arm’s-length entities would not be eligible expenses.
- Expenses are limited to those paid under agreements in writing before October 9, 2020 and would be limited to expenses related to real property located in Canada.
- Mortgage interest expenses in respect of a property primarily used to earn rental income, directly or indirectly, from arms-length entities would not be eligible
Eligible Entities: Include individuals, taxable corporations and trusts, non-profit organizations and registered charities. Eligible entities applying for the subsidy must also meet one of the following criteria:
- Have a payroll account as of March 15, 2020 or have been using a payroll service provider;
- Have a business number as of September 27, 2020 (and satisfy the Canada Revenue Agency that it is a bona fide rent subsidy claim); or
- Meet other conditions that may be prescribed in the future
Calculating Revenue Declines: These declines will be calculated in the same manner as CEWS with the same 65% maximum for all periods ending on or before December 19, 2020. CERS eligibility will need to be determined separately for each period, and a separate application will be required for each period. The timing of the periods will match that of CEWS.
Claims can be made retroactively for the period that began September 27 and ends October 24, 2020.
An additional top-up Canada Emergency Rent Subsidy (the “Lockdown Support”) of 25 per cent will be available for organizations temporarily shut down by a mandatory public health order issued by a qualifying public health authority.
Applications are due by the later of January 31, 2021, and 180 days after the end of qualifying period for both programs. On November 20, 2020, the Government of Canada announced that application for CERS will open on November 23, 2020. Applications can be made through the organization’s My Business Account portal on the Canada Revenue Agency’s website.
Table below summarizes the rate structure for both CEWS and CERS
The table is missing.
On November 2, 2020, Bill C-9 was introduced and implemented some proposed changes to Canada Emergency Wage Subsidy and Canada Emergency Rent Support programs. This Bill received Royal Assent on November 19, 2020. The proposed changes are summarized below:
Canada Emergency Wage Subsidy (CEWS):
- The program will be extended to June 30, 2021
- The subsidy will remain at the current rate of up to a maximum of 65% of eligible wages until December 19, 2020. This was previously set to decline to 45% in November.
- In addition, the revenue-decline test for the base subsidy and the top-up wage subsidy will be harmonized from September 27, 2020 onwards.
Note: the top-up wage subsidy was previously based on the revenue drop over the preceding three months compared to the same months in the prior year OR under the alternative method of comparing monthly revenues with the average of its January 2020 and February 2020 revenues.
- There is a Safe Harbour rule for the top-up subsidy portion, which would entitle an employer to a top-up subsidy rate that is no less than it would have received under the three- month revenue decline test or the alternative method test. This treatment is applicable to periods from September 27, 2020 to December 19, 2020.
Canada Emergency Business Account (CEBA)
This is a summary of information which has become available through announcements, press releases and the program’s website. We expect more details to be provided at a later date, hopefully soon.
- As of October 26, 2020, eligible Canadian businesses currently operating through a personal bank account are be able to apply for CEBA. In order to be considered eligible, a business must have been operating before March 1, 2020, must be able to support the existence of $40,000 of non-deferrable expenditures in 2020 and must open a business bank account with their primary financial institution. Applications must be made through the primary financial institution.
- The application deadline for CEBA is being extended to December 31, 2020.
- An additional interest-free loan of up to $20,000 will be available. This is an addition to the original CEBA loan of $40,000. Half of this additional financing would be forgivable if repaid by December 31, 2022.
- An attestation of the impact of COVID-19 on the business will be required to access the additional financing. Further details as to what criteria will be required to be met have not yet been provided.
For additional information or if you have questions related to this subsidy, please contact your Daye & Partners representative.