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Important: Learn about the key points to Canada's Economic Stimulus plan

Client Communication:

Canada Emergency Rent Subsidy (CERS)

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November 25, 2020

CERS would cover part of eligible businesses’ commercial rent or property expenses, starting on September 27, 2020 until June 2021.

This subsidy will provide payments directly to qualifying renters and property owners, without requiring the participation of landlords.

The CERS provides both a base subsidy and, in some cases, a lockdown support amount.

Some of the key points are:


ELIGIBILITY

To be eligible to receive the rent subsidy, you must meet all four of the following criteria - you:

    1. Meet at least one of these conditions:

        a. You had a CRA business number on September 27, 2020.

            You will need to set one up if you qualify under b or c

            OR

        b. You had a payroll account on March 15, 2020, or another person or partnership made payroll remittances on your behalf

            OR

        c. 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

            OR

        d. You meet other prescribed conditions that might be introduced

            Note: there are no prescribed conditions at this time

    2. Are an eligible business?

        Eligible businesses include:

            a. individuals (other than a trust)

            b. corporations (or trusts)

            c. non-profit organizations

            d. partnerships consisting of eligible employers

    3. Have experienced a drop in revenue?

        • The rate your revenue has dropped is only used to calculate how much subsidy you receive for these periods. There is no minimum revenue drop required to             qualify for the subsidy.

        • Revenue calculation methods available:

            o Calculate revenues under the accrual or cash method

            o And either compare:

                 Monthly revenue year-over year

                 Each month with the average of January and February 2020

            o Once the method is selected you are required to use the same approach for the entire duration of the program.

        • Rate of CERS will depend on the level of revenue decline:

            o Base subsidy

            o And the Top-up subsidy (Lockdown support)

            See CERS rate calculation below.

    4. Have eligible expenses?

        To apply for CERS, you must have a qualifying property. Only certain expenses you pay for qualifying properties are eligible for CERS.


QUALIFYING EXPENSES

Maximum eligible expenses per period

        • $75,000 per business location (base and top-up)

        • $300,000 in total for all locations (including any amounts claimed by affiliated businesses)

            o applies to the base subsidy only

            o there is no maximum for the top-up subsidy

Expenses eligibility criteria

        • Only amounts paid or payable to an arm’s-length party can be included

        • The expense must be in respect of the claim period

        • The expense must be paid or payable under a written agreement in place before October 9, 2020 (or a renewal on substantially similar terms or assignment of             such an agreement)

Eligible Rent Expenses

        • Rent (including rent based on a percentage of sales, profit or similar criteria)

        • Amounts required to be paid or payable by you under a net lease (either to the lessor or a third party). Includes:

            o base rent

            o regular payments for customary operating expenses

            o property and similar taxes

            o regular payments to the lessor for customary ancillary services

Eligible expenses if you own the qualifying property:

        • Property and similar taxes

        • Property insurance

        • Interest on commercial mortgages for the purpose of purchasing real property

            o Your mortgage amount cannot exceed the lesser of:

                 the lowest principal amount secured by one or more mortgages on the property at any time it was acquired

                    OR

                 the cost amount of the property


CERS RATE

Base subsidy rate:  

 Your revenue dropHow to calculate your rate
Revenue drop of 70% or moreThe maximum subsidy rate of 65%
Revenue drop of 50% to 70%

(Your revenue drop - 50%) x 1.25 + 40%

(e.g. 40% + (60% revenue drop - 50%) x 1.25 = 52.5% subsidy rate)

Revenue drop of less than 50%

0.8 x your revenue drop

(e.g. 25% revenue drop x 0.8. = 20% subsidy rate)

Top-up (lockdown support) Rate

You can receive a lockdown support amount for certain locations affected by public health restrictions.

If you have a 0% base rent subsidy rate, you cannot claim a top up for any location.

Your CERS top-up (lockdown support) rate is 25% on lockdown, calculated as:

        • 25% (fixed top-up rate)

        • multiplied by days the location was locked down due to the COVID-19 pandemic

        • divided by 28 (the days in the CERS period)

        • equals Your top-up (lockdown support) rate

E.g. If your location was closed for 15 days due to the lockdown.

25% x (15 lockdown days/ 28 days in CERS period) = 13.39%

You can also use the online calculator to find your revenue drop while calculating how much subsidy you may receive.


DEADLINES

Application must be filed no later than 180 days after the end of a claim period.

More details: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html


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