We aren’t the first to say this, but things sure are changing fast these days! Back in August (which feels like years ago now!), we wrote about Canada’s covid-related subsidies in a newsletter titled “CEWS in the News”. Since then, every single subsidy we covered has been tweaked, extended, updated, or otherwise nixed
Today’s newsletter focuses on a subsidy that didn’t exist back in August. We are going to talk about a new, significant addition to Canada’s covid relief program that we want to be sure every client of ours is aware of: the Canada Emergency Rent Subsidy, or “CERS”
For those who haven’t heard of it yet (it was just announced in October), CERS is a federal subsidy that assists businesses with their monthly property costs. CERS is available to virtually all Canadian businesses, non-profits, and charities – to both renters and property owners – who have seen a drop in monthly revenues. The subsidy runs in 4 week periods, starting with September 27 to October 24th, and continues through to June 2021. At this point there is very little deadline pressure – CRA says they will start processing applications on November 30th, and continue to accept new applications for up to 6 months after the end of each period.
So how much is this subsidy worth? The answer is, as usual, it depends! CERS only funds a portion of your eligible property costs. The important questions are: Which costs are eligible? and What portion of these costs can be claimed?
1. Which property costs are eligible for CERS?
If you are a renter, this includes most costs you are required to pay under a lease agreement, up to $75,000 per claim period. Think: base rent (excluding GST!), property taxes, insurance, and certain customary operating costs.
If you own your business property (which excludes homes), eligible costs may include property taxes, insurance, and interest on your mortgage, not to exceed $75,000 per claim period.
2. What portion of your costs can be claimed?
The portion of your costs that qualify for subsidy are tied to declining monthly revenues.
- Revenue drops of 70% or more qualify for the maximum subsidy – 65%
- Revenue drops over 50% and below 70% qualify for a subsidy between 40% and 65% (the calculation for this tier of subsidy is a bit too complicated for a newsletter!)
- Revenue drops under 50% qualify for a subsidy equal to 80% of their revenue drop (for example, if revenues dropped 20%, your subsidy is 16%)
There is a final tier of subsidy we hope none of you find yourself in. If any of you are in an industry that has been temporarily shut down due to a mandatory public health order, you qualify for the base subsidy plus a 25% top-up. This bumps the maximum claim up to 90%.
Of course, this information is all high-level, and businesses will need to look at their eligibility on a case-by-case basis. If you think you might qualify, or have any questions about CERS or other subsidy programs, we are here to help!