Covid-19: Adapting the Canada Emergency Rent Subsidy (Periods 14 to 20)

Important
The deadline to claim the CERS is 180 days after the end of the claim period.

The Canada Emergency Rent Subsidy (« CERS ») and the lockdown support were implemented as from September 27, 2020. This measure has been extended since, without change until period 16. At the time of the April 19, 2021 federal budget, periods 17 to 20 (until September 25, 2021) were added with some adjustments.

The purpose of the new following technique is to highlight the changes with regards to the extension of the measure. You will find the original text here.

Calculation of the base subsidy

The main change to the subsidy refers to the structure of the base rate. The subsidy is calculated by applying a rate to eligible expenses. The subsidy rate to be claimed by the company depends on the drop in eligible revenue that the company experienced. The following table shows the structure of rates and the progressive reduction of base rates until termination of the measure.

 

Period 8 to 16[1]:

Period 17:

Period 18:

Period 19:

Period 20:

Revenue drop *

 

 

 

 

 

70% and more

 65%

65% 

60%

40%

20%

50% to 69%

40% + (revenue drop (%) - 50%)
 X 1.25

40% + (revenue drop (%) - 50%)
 X 1.25

35% + (revenue drop (%) - 50%) X 1.25

25% + (revenue drop (%) - 50%) X 0.75

10% + (revenue drop (%) - 50%) X 0.5

> 10% to 50%

revenue drop (%)
X 0.8

revenue drop (%)
X 0.8

(revenue drop (%) – 10%)
X 0.875

(revenue drop (%) – 10%)
X 0.625

(revenue drop (%) – 10%)
X 0.25

0% to 10%

revenue drop (%) X 0.8

revenue drop (%) X 0.8

0%

0%

0%

[1] Periods announced prior to the April 19, 2021 budget.

Eligible period

The subsidy currently applies to eligible expenses of an eligible company, incurred during the following periods:

  • Period 8: September 27 to October 24, 2020;
  • Period 9: October 25 to November 21, 2020;
  • Period 10: November 22 to December 19, 2020;
  • Period 11: December 20, 2020 to January 16, 2021;
  • Period 12: January 17 to February 13, 2021;
  • Period 13: February 14 to March 13, 2021;
  • Period 14: March 14 to April 10, 2021;
  • Period 15: April 11 to May 8, 2021;
  • Period 16: May 9 to June 5, 2021;
  • Period 17: June 6 to July 3, 2021; (New)
  • Period 18: July 4 to July 31, 2021; (New)
  • Period 19: August 1 to August 28, 2021; (New)
  • Period 20: August 29 to September 25, 2021. (New)

The Government announced that the measure will end with Period 20.

Calculation of the revenue drop

Like the CEWS, the company will be able to choose between the corresponding month of 2019 method or the alternative method.  Once chosen, the method must be the same during the whole program. These criteria have not changed. However, the Government stated that the reference periods for the additional one will be identical to the reference periods of periods 17 to 20 of the CEWS.

The following table summarizes the reference periods by claim period: 

 

Reimbursement period[2]

General approach

Other approaches

Period 14

from March 14 to April 10, 2021

March 2021 compared to March 2019 or February 2021 compared to February 2020

March or February 2021 compared to average of January and February 2020

Period 15

from April 11 to May 8, 2021

April 2021 compared to April 2019 or March 2021 compared to March 2019

April or March 2021 compared to average of January and February 2020

Period 16

from May 9 to June 5, 2021

May 2021 compared to May 2019 or April 2021 compared to April 2019

May or April 2021 compared to average of January and February 2020

Period 17

From June 6 to July 3, 2021

June 2021 compared to June 2019 or May 2021 compared to May 2019

June or May 2021 compared to average of January and February 2020

Period 18

From July 4 to July 31, 2021

July 2021 compared to July 2019 or June 2021 compared to June 2019

July or June 2021 compared to average of January and February 2020

Period 19

From August 1 to August 28, 2021

August 2021 compared to August 2019 or July 2021 compared to July 2019

August or July 2021 compared to average of January and February 2020

Period 20

From August 29 to September 25, 2021

September 2021 compared to September 2019 or August 2021 compared to August 2019

September or August 2021 compared to average of January and February 2020

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

[2] For periods prior to period 14, see our preceding technique here.

Purchase of company property

To be eligible to the CERS, the applicant must have a company number with the CRA.

The April 2021 budget offers to introduce a deeming rule similar to the existing rule within the CEWS for companies purchasing assets from another one.

Indeed, if some conditions are met, the regulations of the wage subsidy state that a given entity purchasing goods from a seller will be deemed to meet the requirement with regards to payroll accounts if the seller meets this requirement.

In the context of the CERS, the entity purchasing the goods of a company would be deemed to meet the company number criteria when the seller meets the requirement related to the company number. This regulation would be effective at the beginning of the CERS.

Lockdown support

In addition to the rent subsidy rate, you can receive a lockdown support amount for certain locations affected by public health restrictions. To qualify, the first criterion is to have a base rent subsidy rate of more than 0% for the claim period. The criteria and the calculation of the lockdown support remain unchanged with the April 19, 2021 budget.

How Mazars can help you

We understand all the challenges related to the Covid-19 pandemic. We can help you determine the eligibility of your company to this new subsidy and support you in the subsequent steps.

For any question regarding the CERS and the eligibility of your company, please contact your Mazars consultant.

Please visit the CRA Website: click here

 Key contact

Shayne Pringle

Tax Manager
MAZARS

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