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Update: 2020-12-09
Canada Emergency Rent Subsidy (CERS)

What is it?

Allows qualifying tenants (and some landlords) to claim a base subsidy of up to 65% of their qualifying expenses incurred for commercial rent.

Also allows qualifying tenants (and some landlords) to claim a top-up subsidy of up to 25% of their qualifying expenses incurred for commercial rent if they were subject to a COVID‑19‑related public health restriction order.

Who can apply?

You meet at least one of these conditions:

  • As of September 27, 2020, you had a CRA business number.
  • As of March 15, 2020, you had a payroll account.
  • You purchased the business assets of another person.

You must also be:

  • a tenant paying qualifying expenses for a commercial building located in Canada to an arm’s length party under a written agreement entered into before October 9, 2020 (or renewed after this date with similar conditions).
  • OR an owner of a commercial building located in Canada that is not used primarily (more than 50%) to earn rental income or that is used primarily (more than 50%) to earn rental income from a non-arm's length entity that actively uses it (more than 50%).

You must have experienced a drop in revenue:

  • There is no minimum drop in revenue required (simply has to be more than 0%).
  • Same calculation used for the CEWS:
    • Comparison with previous year's income.
    • Comparison with the average income in January and February 2020.
    • Identical elections (consolidated entities, cash versus accrual method, etc.).
    • Uses the highest revenue drop between the current month and the previous month.

Subsidy calculation

Base subsidy

The amount of your base rent subsidy rate is determined by your revenue drop.

Calculating Your Rent Subsidy Rate
Drop in revenue How to calculate your rate
Drop in revenue of 70% or more Maximum subsidy rate of 65%
Drop in revenue of 50 to 70% (your drop in revenue - 50%) × 1,25 + 40%
Drop in revenue of less than 50% 0,8 × your drop in revenue

Top-up subsidy

To qualify for Lockdown Support, you must:

  • have a base rent subsidy rate greater than 0% for the application period (or previous period);
  • have at least one or more locations temporarily closed, or have activities significantly restricted for a week or longer due to a COVID‑19‑related public health order;
  • be required to interrupt some or all of your regular activities while the restriction order is in place.
    • Activities that you were unable to perform must represent at least approximately 25% of total revenues at that location during the previous reference period.

An order that limits or curtails your activities, but does not require you to shut down or interrupt certain activities does not qualify you for Lockdown Support.

Examples of restrictions that do not qualify for Lockdown Support:

  • Travel restrictions that reduce the number of clients.
  • Rules about when you can perform your regular activities, such as restricted or reduced hours of operation or service.
  • Any other restrictions that do not specifically direct you to stop or suspend an activity, such as reduced seating or other physical distancing strategies.

Maximum subsidy of 25% is based on the number of days the business was under health restrictions during the period.

Qualifying expenses and limitations

For each claim period, you can claim qualifying expenses up to a maximum of:

  • $75,000 per location (base subsidy and top-up subsidy).
  • $300,000 overall (including amounts claimed by affiliated entities):
    • this applies to the base subsidy only;
    • there is no maximum for the top-up subsidy.

If you are renting the eligible property, your qualifying expenses are as follows:

  • Rent (including rent based on a percentage of sales, profits or similar criteria).
  • Amounts required to be paid under a net lease (either to the lessor or a third party). These amounts payable could include:
    • base rent;
    • regular payments for normal operating expenses, such as:
      • real estate insurance;
      • utilities;
      • maintenance of common areas.
    • property taxes and other similar taxes, including school and municipal taxes;
    • regular payments to the lessor for customarily supplied ancillary services.

You cannot include the following amounts:

  • sales taxes (such as GST/HST and provincial sales taxes);
  • amounts paid for damages;
  • interest or penalties on unpaid amounts;
  • any other special amount;
  • tenant insurance;
  • leasehold improvements.

If you own the eligible property, your qualifying expenses are as follows:

  • property taxes and other similar taxes:
    • this includes school taxes and municipal taxes if they are part of your property tax assessment.
  • property insurance;
  • interest on commercial mortgages for the purchase of real property:
    • your mortgage amount cannot exceed the lesser of:
      • the lowest principal amount secured by one or more mortgages on the property at any time since its acquisition;
      or
      • the cost of the eligible property.

The following expenses do not qualify:

  • amounts that have been paid for a period outside the claim period;
  • payments between non-arm's length and related entities.

If you earned income from subleasing space on the property to arm's length parties, you must subtract this income from your qualifying expenses.

If you have not yet paid the amounts owing for your qualifying expenses, you must attest (confirm) that these amounts will be paid within 60 days of receiving your rent subsidy payment.

Application periods

Immediate applications:

  • Period 1 (Period 8 CEWS): September 27 to October 24, 2020
  • Period 2 (Period 9 CEWS): October 25 to November 21, 2020

Upcoming applications:

  • Period 3 (Period 10 CEWS): November 22 to December 19, 2020

How to apply?

You must apply online through:

  • My Business Account
  • Represent a Client

Applications must be completed no later than 180 days after the end of the qualifying period.

Do not hesitate to consult the Government of Canada website for more details:

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