Are your business revenues impacted as a result of the COVID-19 pandemic?
If you are renting a commercial property, then you may qualify to get up to 90% of your rent or mortgage interest payments covered under the NEW CERS program, which does NOT require the participation of your landlord. Read below to understand how to apply for CERS and how much of this subsidy you can receive.
What is CERS?
The Canada Emergency Rent Subsidy (CERS) is a newly announced federal program that has replaced the Canada Emergency Commercial Rent Assistance (CECRA) program. The CERS is similar to the CECRA, which provides rent relief for small business owners, but does not require the participation of your landlord, providing you with direct relief. This benefit applies retroactively to September 27, 2020, and is available up to June 2021. In addition to the rent subsidy rate, you can receive lockdown support for certain locations that were affected by public health restrictions (see “CERS top-up” below).
CERS Eligibility Criteria
- You had a CRA business number on September 27, 2020, or:
- You had a payroll account on March 15, 2020, or
- You purchased business assets that meet the above conditions
- Note under this option, both parties must have made an election under the special asset acquisition rules for the claim period
- You are an eligible business, charity or non-profit
- You have experienced a drop in revenue (no minimum)
- You have eligible expenses
CERS Claims Period
The CERB applications are broken into periods and can be filed up to 180 days after the end of a claim period. It is important to note that each period’s claim requires a separate application, so make sure to mark your calendars!
As of the publication date, the following periods have been announced:
- September 27 – October 24, 2020
- October 25 – November 21, 2020
- November 22 – December 19, 2020
Expenses you can Claim
Although the CERS covers a good proportion of the eligible expenses, unfortunately, it does not cover 100% as there are maximums in place and it is calculated on a property by property basis.
Properties (business locations) that qualify include any “real or immovable property” (essentially, buildings or land) in Canada that your business organization:
- Owns or rents, and
- Used in the course of your ordinary business activities
Properties that don’t qualify:
- Your (personal) home, cottage, and other residence used by you, your family members, or other non-arms (related) persons
- Properties you own that are primarily used to earn rental income
For example, if you rent, you can claim the following expenses:
- Amounts required to be paid under a net lease (i.e. certain operating expenses, property taxes, payments made towards ancillary services)
- But cannot claim the following: sales taxes (i.e. GST/HST), damages, interest/penalties for unpaid amounts, etc.
How Much do I Qualify for Under CERS?
Great question! You can use the calculator available on CRA’s website here. In sum, the CERS benefit payout depends on your rent or mortgage interest payments and how much business revenue you have lost.
For EACH claim period, you can claim up to a maximum of $75,000 per business location, or a maximum of $300,000 in total for all locations (this includes amounts claimed by affiliated businesses).
CERS Top-Up (Lockdown Support)
On top of the rent subsidy rate, those that have been impacted by the lockdown (i.e. locations were forced to shut down), qualify for an additional 25% top-up (per location, for the number of days the lockdown order was in place).
This is how you calculate the CERS Benefit Percentage:
- Calculate the drop in the revenue, which can be done by:
- Percentage change from 2019: take the corresponding period in 2019 and calculate the % change in revenue, or
- Percentage change from January/February 2020: calculate the % change in revenue from the month of January or February 2020
- Once you calculated the % change, this is how much CERS Benefit you qualify for:
Don’t forget the top-up, if you qualify:
CERS Top-Up (Lockdown support) calculation:
Overall, the CERS can cover up to 90%: 65% of base rent subsidy + 25% of top-up if you qualify for the lockdown support. The key is to understand your revenue drop and identify those expenses that qualify for the CERS.
The CERS application must be done through your “My Business Account” via the CRA website. If you have direct deposit set-up, you can get your funds between 3 to 8 days after filing.
If you have questions about your business’s eligibility for CERS or would like guidance on applying for the subsidy and making it work for your company, please contact the accounting professionals at Sloan Partners LLP. We are dedicated to delivering reliable and comprehensive solutions to all of our corporate clients. To discuss how we can help, please contact us online or at 416-665-7735 to schedule a consultation.