Federal Budget -> COVID-19 Financial Relief -> CERS / CECRA
Canada Emergency Rent Subsidy Topics
Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) was tabled on November 2, 2020 and received Royal Assent November 19, 2020, providing the legislation for CERS, and changes to CEWS.
CERS applications can be done through the application portal. Apply to create your CERS account number through My Business Account or Represent a Client, where you'll also file your application, after calculating your subsidy through the CERS Portal.
CERS will be available until at least September 25, 2021.
- information on base subsidy calculation and lockdown support top-up
An October 9, 2020 news release announced the Canada Emergency Rent Subsidy.
A business may not have to be completely locked down from conducting business in order to qualify for the 25% lockdown support top-up. For more information see the July 2021 Life in the Tax Lane video from Video Tax News, which includes links to two technical interpretations on this topic.
A March 3, 2021 news release announced that the current structure of the subsidy (max 65%) and lockdown support (25%) would continue until June 5, 2021. Pre-pandemic 2019 reference months can still be used for these periods.
New: Proposed by the Federal 2021 Budget: to extend the Canada Emergency Rent Subsidy and Lockdown Support until September 25, 2021, with additional qualifying periods to be added until November 20, 2021, should the economic and public health situation warrant it, with subsidy rates to be gradually phased out starting on July 4, 2021.
For details of subsidy structure for periods 17 to 20 (June 6, 2021 to September 25, 2021) see Canada Emergency Rent Subsidy Base Rate Structure, periods 17 to 20, on the Budget website. In this table, they've used the CEWS period identifiers for ease of reference.
A July 30, 2021 news release announced the extension of the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and Lockdown Support until October 23, 2021. The rate of support that employers and organizations could receive between August 29th and September 25th is being increased.
The maximum rate for the rent subsidy and wage subsidy will be set at 40% for August 29th to September 25th, instead of being reduced to 20% as previously announced. The maximum rate for period 21, September 26th to October 23rd, will be 20%. The Lockdown Support will be extended to October 23, 2021 as well, at its set rate of 25%.
For details of the CERS base structure for periods 19 to 21, as well as information on the revenue decline calculation, see Extending Business Support Measures Through the Pandemic.
The deadline for rent subsidy applications is 180 days from the end of the period. This is also the deadline to change or increase the amount of your claim. If you need to cancel or reduce a claim, you must call CRA's business enquiries phone number. See:
Video Tax News Changing or Cancelling a CEWS or CERS Claim - lots of detail provided
Video Tax News Amending a CEWS Claim After the Deadline (Also applies to CERS) - must be done within 30 days after the later of April 21, 2021 and the applicable filing deadline.
The subsidy is included in income immediately before the end of the period to which it relates - it does not matter when the subsidy is received.
The deadlines for the extended periods as proposed by the Federal 2021 Budget have been added to the table below, and will be in effect unless revised by legislation.
New: The lockdown support portion of the CERS may be available to eligible property owners with non-arm's length tenants.
CRA information on lockdown support change - scroll down to Lockdown support.
Canada Revenue Agency will be reviewing claims for the Canada Emergency Rent Subsidy.
Video Tax News information on reviews, list of supporting documents needed.
Tax Tip: Keep records of all documents supporting your claims!
The rent subsidy is included in income immediately before the end of the qualifying period to which it relates, as is the Canada Emergency Wage Subsidy (CEWS), as per s. 125.7(3) of the Income Tax Act. For example, the subsidy for the 4 weeks ending October 24, 2020 is included in income on October 24, 2020, not when it is received.
For businesses who file their tax return without inclusion of the CERS as required, a subsequent amendment will be required.
Technical Interpretation 2020-0865661I7 CEWS inclusion in income has been issued by Canada Revenue Agency (CRA) - French version is at the top of the document, English version is at the bottom. It explains the necessity for a tax return amendment if needed regarding timing. The tax treatment for CERS is the same as for CEWS.
The CECRA forgivable loan is taxable when received - see Tax Treatment and Accounting Treatment of Forgivable Loans such as CEBA and CECRA.
The CECRA is administered by the Canada Mortgage and Housing Corporation (CMHC).
The CECRA lowers rent by 75% for small businesses affected by COVID-19, by providing forgivable loans to qualifying commercial property owners to cover 50% of 3 monthly rent payments, for April, May and June. The landlord absorbs (forgives) 25% of the monthly rent. This has subsequently been revised to include rent for July and August. Only tenants who were eligible for April to June are eligible for July and August, and no further documentation needs to be provided - previously eligible tenants are automatically eligible. However, it is not mandatory to include all tenants in the extension for July or August.
Eligibility for the 70% revenue reduction factor is determined on the average of April, May and a forecast of June revenues, comparing to April, May and June 2019, or to the average of January and February 2020.
The landlord must apply for all 3 months at the same time. Multiple applications can be submitted, provided that each application is for a different property. The property owner can only apply for the program once per property, so attestations for each impacted tenant at that property must be included with one application. There is no indication of what happens if the forecast for June is off by enough to make the revenue decline less than 70%.
New applicants can now apply for up to 6 months of rent assistance (from April through September) all at once. If a business had an average revenue decline of 70% or more in April, May and June, they are deemed eligible for all months of rent relief.
As with the July and August extensions (see below), tenants who were eligible for the April to June rent relief will automatically be eligible for the September rent relief.
The deadline for new applications was extended to September 30, 2020.
The deadline to opt-in for the CECRA September extension is October 30, 2020.
Eligible small business tenants
The loans will be forgiven on December 31, 2020, if the property owner agrees to reduce the eligible small business tenants' rent by at least 75% for the 3 months, and agrees to not evict the tenant while the agreement is in place.
The portal opened May 25, 2020.
If you have a problem entering the landlord address, because it pops up with 2 choices and you have to confirm one, if the correct address is showing as the "suggested" address, choose that one and confirm. Choosing the address you entered, even if both are the same, may result in an error message.
The registration requires a mobile telephone number to be provided. What they neglect to tell you is that they will text you your password once the registration is complete. The login name is sent in an email. Hopefully you're not in an area with limited cell service!
If you have problems you can call 1-800-668-2642 or 1-833-610-0515. The morning of the portal opening it was not possible to speak to anyone because these lines were too busy.
CECRA was extended through the end of July 2020, and subsequently to the end of August. Only the tenants approved for the April to June CECRA are eligible for the July support, and they are automatically eligible. This is based on their April and May revenue and their forecast for June revenue. Clawback provisions were removed retroactively. See the CECRA application portal for more information and changes to their Program Details.
Existing applicants will be notified, and CMHC will let them know when the extension application process can be done. Not all tenants need to be included in the July or August applications. A landlord may feel it is not necessary to include a tenant who has their business back up and running and revenues back on track.
Video Tax News CECRA - July extension, 70% test, FAQ update and more - good summary of changes made in July.
CFIB Templates for Businesses re COVID-19 - includes tenant and landlord templates re CECRA.
BDO Canada CECRA to Bring Rent Relief to Small Business Tenants - includes information on provincial announcements re the CECRA.
Baker Tilly Support for Businesses - includes CECRA general eligibility test decision tree.
Revised: July 30, 2021
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca