Canada Emergency Rent Subsidy (CERS)

Budget 2021 proposed extending CERS until September 25, 2021, with the amount of subsidy available gradually declining through periods 10 –13. The bill also gives authority for the minister to extend the CERS to November 20, 2021. Information on the calculation for periods 10-13 can be found below in the question “How do I calculate my CERS?”

CERS is available for both renters and property owners. To determine if your business is eligible, you need to:

1. Own or rent a property that is:
   • Real or immovable (not for domestic purposes); and
   • Located in Canada and used by your business for its ordinary activities
2. Have eligible rent expenses totalling no more than $75,000 per location per period and $300,000 per entity per period
3. Be an eligible entity, including a/an:
   • Individual
   • Taxable corporation or trust
   • Registered charity
   • Partnership of eligible employers
   • Non-profit organization
4. Have experienced a revenue loss during a CERS claim period
5. Have a payroll account as of March 15, 2020 (or have been using a payroll service provider) or have a business number (BN) as of September 27, 2020.

Non-eligible businesses include those who:

• Do not have revenues before March 1, 2020
• Have residential properties such as your home or cottage used by you, your family or other non-arm’s-length persons
• Have properties you own that are primarily used to earn rental income from arm’s-length parties

Note: If your landlord received funding through CECRA, it does not impact your eligibility for the CERS.

A net lease is a written rental agreement between the landlord and a tenant that states the tenant will pay or owes one or more expenses (e.g., rent, property taxes) to the landlord, landlord’s agent, or property management company.

Condo and strata fees:

• For owners: this is not considered an eligible expense. These fees can be claimed as an eligible Working from home expense.
• For renters: CRA is still making a determination on this.

*Speak to your accountant or CRA if this is your situation.

Note:

• For renters and property owners: Only amounts paid or payable to an arm’s-length party are considered eligible expenses.
• For property owners: If you earned any revenue from sub-leasing space to arm’s-length parties, you must subtract that revenue from your eligible expenses.
• Expenses must fall within the claim period you are applying for. Note: the CERS calculator prorates eligible expenses to 28 days.
• Eligible rent expenses are limited to those under agreements entered into before October 9, 2020 and must be in writing.

• Sales tax (e.g., GST/HST)
• Regular business operating payments paid to a third-party provider (e.g., phone or internet)
• Amounts paid as, on account of, in lieu of payment of or in satisfaction of damages
• Amounts paid under a guarantee, security, or similar indemnity of covenant
• Payments arising due to default under the agreement by the eligible entity
• Interest and penalties on unpaid amounts
• Fees payable for infrequent items or special services
• Reconciliation adjustment payments

No. CERS is based on the amount payable (owed) in each claim period, NOT on the amount paid. However, you must attest to pay your rent bill within 60 days of receiving your CERS.

To calculate CERS, businesses need to determine their revenue loss and then use one of the formulas below to calculate the amount of rent subsidy that they will receive. The calculation is as follows:

Periods 1 – 10 (September 27, 2020, to July 3, 2021):

Those with up to 50% revenue loss will get 0.8 times their current revenue loss as a subsidy.

• For example, if your revenue loss is 50%, you will multiply this by 0.8 to receive a 40% rent subsidy.

Those with a revenue loss between 50% and 70% will get 40% plus 1.25 times the incremental amount of loss above 50%.

• For example, if your revenue loss is 60% you will get a CERS of 40% + (1.25x10%) = 52.5% rent subsidy.

Those with 70% or more revenue loss will receive a 65% rent subsidy.

Note: businesses required to shut down due to a public health order are eligible for a maximum 90% subsidy.

Use the CRA calculator to determine your CERS amount.

The following table is a summary of the CERS calculation:

*The percentages shown in the table are for a business that is shut down for the full 28 days of the period. Businesses shut down for fewer days will be entitled to a smaller top-up.

Periods 11 – 13 (July 4, 2021, to September 25, 2021):

You will be eligible for an additional 25% top up if your business is forced to temporarily close or significantly restrict operations for one week or longer due to a COVID-19 related public health order.

The public health order must require you stop or restrict business activities. Restricted activities must account for at least 25% of total revenues at the relevant location during the prior reference period.

Example 1: A restaurant is required to close its dine-in service due to a public health order but is allowed to remain open for take-out service. The restaurant’s dine-in revenues must have accounted for at least 25% of revenues during period 1 to be eligible for the top-up in period 2.

Example 2: A clothing retailer is required to completely close and therefore has no revenues for a given period. The retailer will receive the 65% subsidy, plus the 25% top-up for each day closed or restricted for a possible total of 90% rent subsidy for the period(s) they are completely shut down.

Restrictions that do not qualify your business for the top up:

• Requiring masks for staff and/or customers
• Restricted or reduced hours of operation (i.e., bars and pubs required to close before midnight)
• Seating capacity limits or physical distancing requirements

Revenues for the CERS are calculated in the same way they are for the CEWS. To calculate your revenue drop, you can choose one of the following baseline revenue options:

• General approach:Compare your business eligible revenue for the claim period month in 2020/2021 you are applying for with your eligible business revenue for the same month in 2019.
  OR
• Alternative approach: Compare your business eligible revenue for the claim period month in 2020/2021 you are applying for with your average eligible business revenue for the months of January and February 2020.

Periods 4-13

When calculating your revenue loss, use your revenues from the calendar month and not the claim period. You can use the higher revenue reduction of the two calendar months that fall within the claim period to maximise your subsidy.

These elections are CRA’s way of confirming if you are calculating your CERS revenues differently from the revenues that you regularly submit to CRA.

If in your CERS application, you chose to change your revenues in one (or more) of the below ways be sure to check the corresponding election box correctly. This must be consistent with your CEWS elections. If you have not made any changes to your revenue, then please indicate that you have not made any of the elections in your Attestation form (RC 665-20e).

You will have to determine whether the relationship between the property owner and tenant/subtenant is at arm’s length or non-arm's length because it will affect eligibility.

Non-arm’s length relationships can be more simply viewed as family, significant others, partnerships, or businesses where one partner has controlling interest/voting shares.

Arm’s-length relationships can be viewed as any other individuals or corporations that are treated without preference, and with no blood, trust or controlling relationship.

Unsure if your relationship is arm’s-length or non- arm’s length? Check CRA’s website.

An affiliated entity is an organization that is directly or indirectly controlled by another entity. An example of this would be a subsidiary company. More examples are shared on the government’s FAQ.

Possibly, but it's complicated. There are elections that allow for the holding company to apply for CERS. Under these elections, the Holdco & Opco revenues can be consolidated. Things to note:

• Your CERS and CEWS revenue calculations should be consistent. Your elections must match up.
• Rent is not eligible, but other arm’s-length eligible expenses for the holding company may be eligible (e.g., property taxes, mortgage and property insurance)
• A holding company will be eligible for the lockdown (top-up) support, providing they meet all the other applicable conditions.

If your business is in this situation:

• Check the list of elections from the Income Tax Act
• Speak to your accountant
• Call CRA business enquiries at 1-800-959-5525

The missed rent from May to September is not included in this program. CFIB continues to advocate to make this available to those who have fallen through the cracks of support.

To prepare, ensure that you have access to your MyBA or Represent a Client portals and that the people who deal with this information (those applying on your business’ behalf) have the proper authorities. Before you start your application, you should have your:

• Monthly qualifying revenue amounts from 2019 and 2020
• The eligible expenses broken down by business location
• The property address
• The name and contact information for your
  • mortgage holder (for property owners)
  • landlord (for renters)
• Affiliated entities also require the following:
  • Number of affiliated entities in the agreement
  • Percentage assigned to you under the agreement with your affiliated entities
  • Business number of each affiliated entity
  • Percentage assigned to each affiliated entity under the agreement

The only way to apply for the CERS is through MyBA or Represent a client. There is no paper version or any other non-electronic method to apply for the CERS.

• Direct deposit: 3-8 days after filing your claim.
• Cheque by mail: 7-17 days after filing your claim (mail service dependent). Ensure your address on your MyBA is up to date as this is where CRA will send your cheque.

If you have not heard anything 8 days after filing your claim, you can call the CRA Business enquiries line (1-800-959-5525) for a status update. Please prepare for long wait times.

You can cancel or amend a previous application via either My Business Account or Represent a Client. The deadline is 180 days after the end of the period to change or increase the amount of your claim.

If you need to cancel or reduce the amount of your claim after the deadline you can do so by calling the CRA’s business enquiries line at 1-800-959-5525.

More information on changing or cancelling a claim can be found on the CRA website.

CERS replaced the CECRA, which ended on September 30, 2020, for new applications and October 30, 2020, for extensions. If you received CECRA funding this will not impact your CERS. For more information on the CECRA program, view our CECRA FAQ. Please note that the program is no longer available, and we are not updating our FAQ.