CKL BUSINESSES - THE NEW FEDERAL (COMMERCIAL) RENT SUBSIDY - HOW TO QUALIFY AND APPLY; WHAT YOU'LL GET. WHAT YOU NEED TO KNOW TODAY.

 

Canada Emergency Rent Subsidy (CERS)

CKL's businessesnon-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic may be eligible for a subsidy to cover part of their commercial rent or property expenses, starting on September 27, 2020, until June 2021.

This subsidy will provide payments directly to qualifying renters and property owners, without requiring the participation of landlords.

If you are eligible for the base subsidy, you may also be eligible for lockdown support if your business location is significantly affected by a public health order for a week or more.

Eligibility criteria

To be eligible to receive the rent subsidy, you must meet all four of the following criteria – you:

1.Meet at least one of these conditions:

1. You had a CRA business number on September 27, 2020

2. You had a payroll account on March 15, 2020, or another person or partnership made payroll remittances on your behalf

3. You purchased the business assets of another person or partnership who meets condition 2 above, and have made an election under the special asset acquisition rules
These special asset acquisition rules are the same for the Canada Emergency Wage Subsidy (CEWS).

4. You meet other prescribed conditions that might be introduced
Note: there are no prescribed conditions at this time

If you don’t have a business number but you qualify under condition b or c, you will need to set one up before you are able to apply for CERS.

You do not need a payroll account to apply for CERS.

2.You are an eligible business, charity, or non-profit (eligible entity). 

Types of businesses, charities, or non-profits (entities) that are eligible for CERS

  • individuals (other than a trust)

  • corporations (or trusts) that are not exempt from income tax (Part I of the Income Tax Act)

  • the following persons that are exempt from income tax (Part I of the Income Tax Act):

    • non-profit organizations

    • agricultural organizations

    • boards of trade

    • chambers of commerce

    • non-profit corporations for scientific research and experimental development

    • labour organizations or societies

    • benevolent or fraternal benefit societies or orders

  • registered charities

  • partnerships consisting of eligible employers (including partnerships where at least 50% of the interests in the partnership are held by eligible employers)

  • the following prescribed organizations:

    • certain Indigenous government-owned corporations that carry on a business

    • partnerships consisting of eligible employers and certain Indigenous governments

    • registered Canadian amateur athletic associations

    • registered journalism organizations

    • private schools or private colleges, and

    • partnerships consisting of eligible employers (including partnerships where at least 50% of the interests in the partnership are held by eligible employers)

Public institutions are not eligible for the subsidy. This includes municipalities and local governments, Crown corporations, public universities, colleges and schools, and hospitals.

If your business, charity, or non-profit is related to another eligible entity, you may be considered an "affiliated entity".

This may affect your calculations for the subsidy.

If your business, charity, or non-profit is related to another eligible entity, you may be considered an "affiliated entity".

This may affect your calculations for the subsidy.

3.Experienced a drop in revenue

Your drop in revenue is calculated by comparing your eligible revenue during the reference period with your eligible revenue from a previous period (baseline revenue).

There is no minimum revenue drop required to qualify for the subsidy. The rate your revenue has dropped is only used to calculate how much subsidy you receive for these periods.

Calculate your revenue drop online

After you have read about the expenses you can claim, you can use the online calculator to find your revenue drop while calculating how much subsidy you may receive.

A CERS application must be filed no later than 180 days after the end of a claim period.

4.Have eligible expenses

To apply for CERS, you must have a qualifying property. Only certain expenses you pay for qualifying properties are eligible for CERS.

How to apply:

For information about claim periods, including for between November 22 to December 19, 2020, click here: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy/cers-periods-apply.html

The CERS covers a portion of eligible expenses in respect of a claim period for each qualifying property, subject to certain maximums. The CERS is calculated on a property by property basis.

Qualifying property

Properties (business locations) that do qualify include any "real or immovable property" (buildings or land) in Canada that your business or organization:

  • owns or rents, and

  • uses in the course of your ordinary business activities

Properties that do not qualify, include:

  • your home, cottage, or other residence used by you, your family members, or other non-arm’s-length persons

  • any properties you own that are primarily used to earn rental income from arm’s-length parties

Eligible expenses

For each claim period, you can claim eligible expenses up to a maximum of:

  • $75,000 per business location (base and top-up)

  • $300,000 in total for all locations (including any amounts claimed by affiliated businesses)

    • applies to the base subsidy only

    • there is no maximum for the top-up subsidy

Eligibility criteria for expenses

There are a few criteria expenses need to meet, in order to be eligible to be included in your claim for a particular claim period.

  • Only amounts paid or payable to an arm’s-length party can be included

  • The expense must be in respect of the claim period

  • The expense must be paid or payable under a written agreement in place before October 9, 2020 (or a renewal on substantially similar terms or assignment of such an agreement)

If you have not paid the amounts due for your eligible expenses yet, you must attest (confirm) that these amounts will be paid within 60 days of receiving your rent subsidy payment.

You cannot claim expenses that were paid or payable:

  • to non-arm’s-length entities

  • for a timeframe that falls outside of the claim period you are applying for

If you rent the qualifying property, your eligible expenses are:

  • Rent (including rent based on a percentage of sales, profit or similar criteria)

  • Amounts required to be paid or payable by you under a net lease (either to the lessor or a third party). Includes:

    • base rent

    • regular payments for customary operating expenses

    • property and similar taxes

    • regular payments to the lessor for customary ancillary services

You cannot include amounts paid or payable for:

  • sales taxes (such as GST/HST and provincial sales taxes)

  • damages

  • interest or penalties on unpaid amounts

  • other special amounts

If your landlord received an amount under the Canada Emergency Commercial Rent Assistance (CECRA) program and they applied the amount to your future rent payments, you can still claim the full rent amount in the current period.

If you own the qualifying property, your eligible expenses are:

  • Property and similar taxes

    • Includes school taxes and municipal taxes, if these are part of your property tax assessment

  • Property insurance

  • Interest on commercial mortgages for the purpose of purchasing real property

    • Your mortgage amount cannot exceed the lesser of: the lowest principal amount secured by one or more mortgages on the property at any time it was acquired; OR the cost amount of the property

Expenses that are not eligible include:

  • payments between non-arm’s-length entities

  • amounts that were paid or payable for a time that fall outside of the claim period

If you earned any revenue from sub-leasing space on the property to arm’s-length parties, you must subtract that revenue from your eligible expenses.


Thank you for reading this - Jason Ward, Broghan Dean of WARDS LAWYERS PC.

If you would like to read more, please go to wardlegal.ca/posts.

This WARDS LAWYERS PC blog is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca | broghan@wardlegal.ca | www.wardlegal.ca