The COVID-19 crisis has wreaked havoc on businesses across Canada. Many have seen drastic drops in revenue, which has made it difficult for them to not only keep their businesses alive but to keep up with their own household bills.
Thankfully, the government has established various financial assistance programs to help Canadians who continue to struggle as a result of the current health crisis.
Businesses have specific programs available to them, including the Canada Emergency Rent Subsidy (CERS) which provides financial assistance designed to cover some of the expenses related to commercial rent, mortgages, or property expenses.
More specifically, the program, which began on September 27, 2020, will pay out eligible commercial renters and property owners directly without the need to get landlords or lenders involved.
What is The Canada Emergency Rent Subsidy (CERS)?
The CERS program was created by the federal government to offer support to businesses that have seen a significant reduction in revenue stemming from restrictions placed to curb the spread of COVID-19.
The program will help cover some of the costs of mortgages and rent for commercial property. The Canada Revenue Agency (CRA) is responsible for administering the subsidy that will directly support tenants and mortgagors.
Check out how to defer your mortgage payments.
How Does CERS Work?
If you run a business that has been negatively impacted by the coronavirus pandemic, you may be eligible for CERS. If so, you will receive a subsidy for one or more 28-day periods. You will have to re-apply for CERS after every period if you continue to require financial assistance. The program is available until September 25, 2021.
The subsidy rate depends on the degree of loss and offers a maximum amount of 65%. You will need to prove that your business experienced revenue loss up until December 19, 2020. If you qualify for CERS, you could qualify for lockdown support if your business is heavily impacted by a public health order for a week or more. With lockdown support, you can get another 25% top-up.
How to Apply For CERS
In order to apply for the CERS benefit online, you’ll need to set up a My Business Account with the CRA. You’ll also need a CERS number to apply.
You’ll be asked to choose the claim period you’re applying for and provide the following information about the property in question:
- Property address
- The amounts you have paid or still owe for all qualified expenses
- The name and contact information of your lender if you hold a mortgage for the property
- The name of the landlord if you are renting the property
If you have any affiliated entities associated with your business that need to claim the CERS for the same period, you’ll need to provide the following:
- The number of affiliated entities involved
- Each entity’s business number
- The share assigned to you and each affiliated entity under the agreement
Once you apply, you’ll have the option to be paid by cheque or direct deposit. If you choose to have your payment deposited into your bank account, you will have to register for direct deposit in order to start receiving payments. You’ll be paid within 3 to 8 days if you choose direct deposit.
You have up until 180 days after the claim period ends to apply for CERS.
What Kind of Expenses Can be Claimed?
The CERS offers coverage for certain eligible expenses that can be claimed in each claim period and depends on whether the property in question is being rented or is owned.
For rental properties, the following expenses can be claimed:
- Gross rent
- Operating expenses, such as utilities and insurance
- Property taxes
- Expenses associated with services outside the business, such as parking fees
For properties that are owned, the following expenses can be claimed:
- Property insurance
- Property taxes
- Interest on mortgages used to buy the property
Any expenses claimed must have been payable during the claim period you are applying for.
Check out how to avoid capital gains tax.
How Much Can You Claim?
A maximum of $75,000 can be claimed in eligible expenses per location. You can claim an overall maximum amount of $300,000 in expenses for you and any other entities that are affiliated with your business per claim period.
If your business must close or stop conducting certain activities for at least a week because of government orders as a result of COVID-19, you may qualify for lockdown support of a maximum of 25% of eligible expenses per location impacted for the time frame that the order remains in effect.
Learn how to file a business tax return.
How is CERS Calculated?
The amount you’re allowed to claim under CERS depends on how much of a decrease in revenue that your business experienced:
- If your business experiences a decline in revenue of 70% or more, your maximum subsidy rate will be 65%.
- If your business experiences a decline in revenue of anywhere between 50% to 70%, the calculation would be as follows:
(Your revenue drop – 50%) x 1.25 + 40%
- If your business experiences a decline in revenue of less than 50%, you would multiply your revenue drop by 0.8.
If your business qualifies for lockdown support because of public health restrictions placed, you can claim a CERS top-up rate of 25%, which is calculated as follows:
25% x # of days your location was in lockdown ÷ 28 (the number of days in each CERS period)
For instance, if your business was in lockdown for 14 days, your lockdown support rate would be 12.5% (25% x 14 ÷ 28).
Learn how to manage a seasonal business’s cash flow.
What Qualifies For Lockdown Support?
In order to be eligible for lockdown support, you must meet the following criteria:
- Have a base rent subsidy rate of over 0% for the period you’re claiming
- Have one or more business locations closed or have had activities significantly cut down for at least a week due to government-issued COVID-19-related restrictions
If your business is closed or has had to reduce its activities because you failed to adhere to public health orders, you won’t qualify for lockdown support.
Looking for additional funds. The Government of Canada offers a number of grants, subsidies and financing programs for small businesses.
Final Thoughts
Businesses have certainly suffered thus far in 2020 because of COVID-19, and they continue to face financial challenges as the crisis continues. The CERS offers one way to help business owners come up with the money their lenders and landlords come looking for every month to cover a portion of mortgages and rent.
