The federal government recently introduced more information on the new Canada Emergency Rent Subsidy (CERS).
Canada Emergency Rent Subsidy (CERS)
The CERS will be available retroactive to September 27, 2020, and runs until June 2021. The government has released details for the first 12 weeks of the program, until December 19, 2020.
HGA will update you when applications for CERS are open.
Eligible entities
Eligible entities include:
- Individuals
- Taxable corporations and trusts
- Non-profit organizations and registered charities.
Additionally, the eligible entity must 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.
Subsidy amount
Qualifying organizations that have suffered a revenue drop would be eligible for a subsidy on eligible expenses.
| 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 |
Calculating revenues
Revenues are calculated in the same manner as the Canada Emergency Wage Subsidy program (CEWS).
- An entity’s revenue for the purposes of the rent subsidy is its revenue from its ordinary activities in Canada earned from arm’s-length sources, determined using its normal accounting practices. Revenues from extraordinary items and amounts on account of capital are excluded.
- For registered charities and non-profit organizations, the calculation includes most forms of revenue, excluding revenues from non-arm’s length persons. These organizations are allowed to choose whether to include revenue from government sources as part of the calculation. Once chosen, the same approach would have to apply throughout the program period.
- Special rules for the computation of revenue are provided to take into account certain non-arm’s-length transactions, such as where an entity sells all of its output to a related company that in turn earns arm’s-length revenue.
- Affiliated groups that do not normally compute revenue on a consolidated basis may elect to do so.
The revenue decline reference period would apply to both the base CEWS and CERS. Once an entity has chosen an approach, they must use that approach for each of the three periods.
| Qualifying period | General approach | Alternative approach | |
| Period 8 | September 27 to October 24, 2020 | October 2020 over October 2019 or September 2020 over September 2019 | October 2020 or September 2020 over average of January and February 2020 |
| Period 9 | October 25 to November 21, 2020 | November 2020 over November 2019 or October 2020 over October 2019 | November 2020 or October 2020 over average of January and February 2020 |
| Period 10 | November 22 to December 19, 2020 | December 2020 over December 2019 or November 2020 over November 2019 | December 2020 or November 2020 over average of January and February 2020 |
| Note: The period numbers align with those used for the Canada Emergency Wage Subsidy, for simplicity. Period 8 of the Canada Emergency Wage Subsidy program is the first period for which the rent subsidy will be in effect. | |||
All applications must be made on or before 180 days after the end of the qualifying period.
Eligible expenses
Eligible expenses include:
- Commercial rent
- Property taxes (including school taxes and municipal taxes)
- Property insurance, and
- Interest on commercial mortgages (subject to limits) for a qualify property, less any subleasing revenues
Note that sales tax on any of the above costs (eg. GST or HST) is not an eligible expense.
These expenses must have been committed to, in writing, prior to October 9, 2020. In addition, payments made between non-arm’s length entities or related to mortgage interest to earn rental income are not eligible.
Expenses for each qualifying period would be capped at $75,000 per location and be subject to an overall cap of $300,000 that would be shared among affiliated entities.
HGA will continue to update our COVID-19 resource centre with information about government benefits and programs and more information is released.
You can find our resource centre here. If you have any questions, please contact your HGA Advisor or info@hgacpa.com.
