Federal Government Announces CERS: A New, Targeted Support To Help Businesses Through The Pandemic
November 30, 2020
The recently introduced Canada Emergency Rent Subsidy (CERS) will provide rent and mortgage support to small Canadian businesses who have seen a drop in revenue or have been temporarily shut down by a mandatory public health order.
Key Facts About Canada Emergency Rent Subsidy
The government introduced the Canadian Emergency Rent Subsidy (CERS) to provide support to help businesses and other organizations to safely get through the second wave of the virus and the winter, cover costs so they can continue to serve their communities, and be positioned for a strong recovery. Here are the key facts:
- Eligible subsidy is determined by the total revenue loss experienced
- Individuals, Taxable Corporations and Trusts, Registered Charities, Partnerships and Non-Profit Organizations can all qualify for the subsidy
- Subsidy is available directly to the renter
- The CERS program is due to run from September 27, 2020 until June 7, 2021
- The deadline to submit a claim to CRA is 180 days after the end of each claim period
Calculations of Benefits
To calculate CERS, Businesses will need to calculate the revenue loss and multiply this by a number determined by the by the government to calculate the amount of rent subsidy that they will receive.
Calculation of the benefits are based on a 3-tiered system:
- Tier 1 – Entities with up to 50% revenue loss will multiply the percentage by 80% to calculate the subsidy
- Tier 2 – Entities with revenue loss between 50% – 70% will receive the maximum 40% subsidy from tier 1 and also receive 1.25 times the loss percentage above 50%
- Tier 3 – Entities with revenue loss of 70% or higher will receive a 65% subsidy
|Tier||Revenue Loss||Rent Subsidy Calculation|
|1||Up to 50%||CERS = Revenue loss % x 80%|
|2||50% – 70%||CERS = 40% + [1.25 x (revenue loss % above 50% only)]|
|3||70% +||CERS = 65%|
In addition to the above tiers, any businesses required to shut down due to a public health order will receive an additional 25% subsidy regardless of the tier that they are in. The maximum subsidy any one business can receive is 90%.
The eligible expenses for renters when calculating revenue loss include the following:
- Gross rent
- Amounts required to be paid under a net lease as base rent
- Regular installments of operating expenses (e.g. insurance, utilities, maintenance of common areas etc.)
- Property and similar taxes
- Regular instalments for ancillary services (e.g. parking fees)
Renters will not be able to include:
- Sales tax (GST/HST)
- Interest and penalties on unpaid amounts
- Reconciliation adjustment and other amounts
Application Process and Additional Details
The application process appears to be very straightforward and can be accessed through CRA’s website here. The log in for your business account is at the bottom of the page.
Should you want to do some more research, the Canadian Federation of Independent Business has an article which very concisely describes how the CERS will work and be calculated.
Provision CPA is happy to calculate the CERS benefits and apply on behalf of your business. This service would be at an additional cost to your existing agreement. If you have any questions, please do not hesitate to reach out to your Provision CPA contact for more information.
In these unprecedented times, we understand that there is a lot of information to disseminate.
We at Provision are here to help you in any way we can. Feel free to reach out directly to your contact at Provision for more details and clarifications.
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