Canada: Federal Rent Subsidy For Businesses Impacted By COVID-19: Effective Today

Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic may be eligible for a new subsidy to cover part of their commercial rent or property expenses. The new Canada Emergency Rent Subsidy ("CERS") replaces the previous rent support program for businesses.

Unlike the previous program, CERS will provide payments directly to qualifying renters and property owners, without requiring the participation of landlords. This means that tenants need no longer rely on landlords applying on their behalf.

In order to be eligible, applicants must meet all of the following four criteria:

1. Meet  at least one  of these three conditions:

•  
  • Held a CRA business number on September 27, 2020

or

•  
  • Held a payroll account on March 15, 2020, or another person or partnership made payroll remittances on their behalf

or

•  
  • Purchased the business assets of another person or partnership who meets condition 2 above, and made an election under the special asset acquisition rules

2) Be one of the following eligible entities:

•  
  • individuals (other than a trust)
  • corporations (or trusts) that are not exempt from income tax (Part I of the Income Tax Act)
  • the following persons that are exempt from income tax (Part I of the Income Tax Act):
    •  
      • non-profit organizations
      • agricultural organization
      • boards of trade
      • chambers of commerce
      • non-profit corporations for scientific research and experimental development
      • labour organizations or societies
      • benevolent or fraternal benefit societies or orders
  • registered charities
  • partnerships consisting of eligible employers (including partnerships where at least 50% of the interests in the partnership are held by eligible employers)
  • the following prescribed organizations:
    •  
      • certain Indigenous government-owned corporations that carry on a business
      • partnerships consisting of eligible employers and certain Indigenous governments
      • registered Canadian amateur athletic associations
      • registered journalism organizations
      • private schools or private colleges
      • partnerships consisting of eligible employers (including partnerships where at least 50% of the interests in the partnership are held by eligible employers)

3) Experience a revenue drop

There is no minimum revenue drop required to qualify for the subsidy. However, the amount of the subsidy is calculated in accordance with the rate the applicant's revenue has dropped. The new program will cover up to 65 percent of rent or commercial mortgage interest on a sliding scale based on revenue declines, with an extra 25 percent available for businesses that have been hit particularly hard.

4) Have Eligible Expenses

To apply for CERS, the applicant must have a qualifying property. Only certain expenses for qualifying properties are eligible for CERS. Properties that do qualify include any buildings or land in Canada that an eligible entity:

•  
  • owns or rents, and
  • uses in the course of their ordinary business activities.

Properties that do not qualify, include:

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  • homes, cottages, or other residences used by the applicant, their family members, or other non-arm's-length persons
  • any properties the applicant owns that are primarily used to earn rental income from arm's-length parties

CERS relief payments will be available until June 2021. Applicants can now apply for the period beginning September 27, 2020, and ending October 24, 2020,  through this link. CERS applications must be filed no later than 180 days after the end of a claim period.