The Canada Emergency Rent Subsidy (CERS) program is intended to replace the Canada Emergency Commercial Rent Assistance (CECRA) program. While the name of this new program is similar, it will work in a much different manner than its predecessor. The new CERS will allow businesses to apply directly for the benefit without having to go through landlords. Commercial property owners may also qualify for the CERS!
The Canada Emergency Rent Subsidy (CERS) for Commercial Renters will provide for a subsidy for businesses, charities and non-profit organizations that have suffered a revenue drop due to COVID-19.
Qualifying Rent Expenses for Commercial Tenants
Qualifying rent expenses for commercial tenants include the following:
- Gross rent.
- Rent based on a percentage of sales, profit or a similar criterion.
- Amounts required to be paid under a triple net lease as regular instalments of operating expenses, property taxes and ancillary services.
- The qualifying rental amount must be reduced by amounts received from subletting the property.
The following amounts are excluded from the calculation of qualifying rent:
- Sales taxes (GST/HST/PST)
- Amounts paid as/on account of/in lieu of payment/satisfaction of damages
- Amounts paid under a guarantee, security or similar indemnity or covenant
- Payments arising due to default under the agreement by the eligible entity
- Interest and penalties on unpaid amounts
- Fees payable for discrete items or special services
- Common area maintenance reconciliation adjustment payments
Qualifying Expenses for Commercial Property Owners
Commercial property owners may claim interest on mortgage or debt obligations secured on the qualifying property as well as insurance and property taxes for the property. The qualifying expenses must be reduced by amounts received from leasing the property. For property owners, qualifying holding period costs are capped at $75,000 per period.
The calculation of the Canada Emergency Rent Subsidy (CERS) will be much like the current calculation for the Canada Emergency Wage Subsidy (CEWS). For example, the periods used in the calculation of the Canada Emergency Rent Subsidy will be identical to those in calculating the CEWS. The first period for which businesses, charities and non-profit organizations can claim the CERS will be for the period of September 27, 2020 to October 24, 2020.
The good news is the revenue decline calculation for the Canada Emergency Rent Subsidy (CERS) will be calculated using the same revenue reduction percentages as in the calculation of the Canada Emergency Wage Subsidy (CEWS). The maximum subsidy under the regular CERS program will be 65% in a particular period.
The CERS program will also provide for a top-up or “Lockdown Support” of 25% for businesses that must shut their doors or significantly limit their activities under a public health order. This means that the total subsidy for businesses, charities and non-profit organizations that are subject to a government-imposed lockdown could receive rent support under the CERS of up to 90%.
The information provided in this article is intended to provide an overview of the CERS program. If you would like RHN CPA to calculate and prepare your CERS application, contact one of RHN CPA’s offices today.
Follow this link to a new chart that the Finance Department has released showing the details of the calculation and how it mirrors the CEWS calculation.