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Canada Emergency Rent Subsidy

On November 23, 2020, the government has provided details on the new Canada Emergency Rent Subsidy (CERS). This new subsidy program provides relief to qualifying entities who were negatively affected by COVID-19.

The CERS covers up to a maximum 65% of eligible expenses if your business has experienced a revenue drop of at least 70%. Even if your revenue drop is less than 70%, you may still qualify for a decreased version of CERS depending on how much your revenue has dropped. Also, if your business was forced to shut down due to mandatory public health orders, then the benefits you receive from the subsidy also increases.

Here are some important details about the program:

Eligibility

To qualify, you must have experienced a drop in revenue, have eligible expenses (explained below) and meet one of the following conditions:

  1. You had a CRA business number on September 27, 2020. OR
  2. You had a payroll account on March 15, 2020. OR
  3. You purchased the practice or business assets of another entity who meets the above conditions.

Despite its name, the subsidy also applies to entities that own their business location. The owned or rented property must be used primarily for your ordinary business activities. Properties that are used to primarily earn rental income do not qualify for this subsidy.

Revenue drop

Like the Canada Emergency Wage Subsidy (CEWS), the rate your revenue has dropped determines how much you receive for that period. Your drop in revenue is calculated by comparing your reference period revenue to the baseline revenue amount. Below are the first 3 claim periods

PeriodClaim periodApplication start dateReference period revenueBaseline revenue
1September 27 to October 24, 2020NowOctober 2020October 2019 OR
Average of January and February 2020
2October 25 to November 21, 2020November 30, 2020November 2020November 2019 OR
Average of January and February 2020
3November 22 to December 19, 2020December 23, 2020December 2020October 2019 OR
Average of January and February 2020

Once you have determined your revenue drop, you can then calculate your subsidy rate as below.

Your revenue dropHow to calculate your rate
Revenue drop of 70% or moreMaximum subsidy rate of 65%
Revenue drop of 50% to 70%(Revenue drop – 50%) x 1.25 + 40%
Revenue drop of less than 50%Revenue drop x 0.8

The subsidy amount is determined by multiplying the subsidy rate against total eligible expenses.

Eligible expenses

Eligible expenses are amount paid or payable in a claim period and it can be expenses such as

  • Rent
  • TMI/CAM (if applicable)
  • Property taxes
  • Insurance
  • Interest on commercial mortgage

Lockdown support

If you qualify for CERS and your business location is temporarily closed or have activities significantly restricted for a week or longer due to COVID-19 related public health order, then you may qualify for the lockdown support. The lockdown support provides an additional 25% on top of the base subsidy rate.

Please do not hesitate to give us a call if you have any questions or would like assistance with your CERS application. Our experienced SYC team is here to help!

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