Roger Wohlner is a writer and financial advisor with over 20 years of financial services experience. He writes about financial planning for Wealthsimple and for a number of financial advisors. His work has been published in Investopedia, Yahoo! Finance, The Motley Fool, Money.com, US News among other publications. Roger owns his own finance blog called 'The Chicago Financial Planner'. He holds an MBA from Marquette University and a Bachelor’s degree with an emphasis on finance from the University of Wisconsin-Oshkosh.
The CERS program can provide a financial shot in the arm for Canadian businesses and non-profits impacted by COVID-19 by providing rental and mortgage assistance.
What is CERS?
CERS stands for Canada Emergency Rent Subsidy. CERS provides rent and mortgage assistance to small businesses impacted by COVID-19. The subsidy program is administered by the Canada Revenue Agency (CRA). Changes to the program need to be approved by the Canadian Parliament.
Who can apply?
There are four criteria that must be met in order to apply for a CERS rent subsidy:
You must meet at least one of these conditions:
You had a CRA business number as of September 27, 2020.
You had a payroll account on March 15, 2020 or there was another person or partnership who made payroll remittances on your behalf.
You’ve purchased the business assets of another person or partnership who meets one of the two criteria above and you have made an election under the special asset rules.
You meet other conditions that might be introduced at a later time.
You are an eligible business, charity or non-profit.
Your entity experienced a drop in revenue based on your revenue for the eligible period as compared to a prior baseline period.
You must have eligible expenses for an eligible property.
What expenses can I claim?
CERS will cover a portion of eligible expenses for a set claim period for each eligible property you may own. CERS is calculated separately for each qualifying property and expenses are subject to certain maximum levels.
Properties that qualify include Canadian buildings or land that your business or organization:
Owns or rents
Uses in the course of your ordinary business or organizational activities.
Eligible expenses include:
A maximum of $75,000 per business location
A total maximum of $300,000 for all locations including any amounts claimed by affiliated entities
The eligibility criteria for expenses include:
Only amounts that have been paid or that are payable to an arms-length entity can be included.
The expense must pertain to the eligible claims period.
The expense must have been paid or be payable based on a written agreement that was entered into before October 9, 2020. A renewal on substantially similar terms of an agreement or an assignment of an eligible agreement is acceptable as well.
What periods can I apply for?
Each CERS claim period is a four-week period beginning on a Sunday. The rent subsidy does not renew automatically, you must reapply for each new period.
The current claim period covers the time from September 26 through October 23, 2021. The last day to apply for a rent subsidy for this period is Thursday, April 21, 2022.
Note: The government is proposing to extend COVID-19 business support programs until May of 2022 to cover organizations that have been hit the hardest by the pandemic or that have been hit the hardest by related public health restrictions.
How do I calculate the amount I can claim?
The Canadian government offers a detailed explanation of the calculation method and a calculator on this site. Here are some highlights of the calculation process.
The base subsidy rate pertains to the maximum of $75,000 in eligible expenses allowed per location and the $300,000 maximum in expenses for you and affiliated entities in total.
If you were required to close a location or cease certain activities at one or more of your locations under a public health order for a period of one week or more, you may be eligible for lockdown support of up to 25% of eligible expenses per location for the period that the lockdown order was in place.
Calculating the base rent subsidy rate
The rent subsidy rate is based on the revenue drop experienced between the claim period that you are applying for and a prior reference period as specified. The reference period is either a general reference period or an alternative reference period based on your situation.
This chart from the site will provide an example of what your calculation might look like:
|Your revenue drop||How to calculate your rate|
|70% or more||The maximum subsidy rate of 65%|
|50 to 69.99%||(Your revenue drop - 50%) x 1.25 + 40%|
|Less than 50%||0.8 x your revenue drop|
Calculating your lockdown support rate
In addition to the basic rent subsidy, you might be eligible for a lockdown support payment if your location(s) was impacted by certain public health restrictions.
The lockdown support rate is calculated as:
The 25% lockdown rate
Times the number of days the location was locked down due to COVID-19 restrictions
Divided by 28 (the number of days in the lockdown period)
Lockdown support eligibility criteria
To qualify for lockdown support you must have:
A base rent subsidy of greater than $0 for the base period
One or more locations that have been closed or whose activities have been severely hampered for a week or longer due to a public health order related to COVID-19
Note the minimum lockdown period can span across two different claim periods
How do I apply?
There are a number of steps in the application process.
Set up your online account
Applicants must apply online by establishing a business account for themselves. For professionals who are representing a client who is applying there is a separate registration link to apply as a representative. This pertains to professionals like an attorney or an accountant.
Review your mailing address and other contact information
In the My Business account section, be sure that your account is updated with your current mailing address and other contact information. This allows the agency administering the program to contact you should they have questions regarding your application, which can help to speed up the process for you.
Create a CERs (ZA) number
You must create this number before applying. The online application will ask you for this number.
Set up direct deposit
This will speed up your receipt of the money if your application is approved. The site indicates that payments by direct deposit generally take between 3 to 8 days. Payment by a check that is mailed often takes about 14 days. Be sure your direct deposit information is up to date with the CRA.
Before applying for a given subsidy period:
Confirm that the claim period you are applying for is open
There is a drop-down menu on the site showing the claim periods that are currently open and those that are closed.
Gather all of the information that you will need to complete the application
For qualifying property you will need:
Amounts owed or that have been paid for qualifying expenses
The property address
The name and contact information of the landlord if you are renting the property location or the name of the mortgage holder if you own the property and have an outstanding mortgage
(The site urges applicants to retain the information for all properties submitted in case this information is asked for later on in the process.)
For affiliated entities that have claimed or who will be claiming the CERS, you will need:
The number of affiliated entities included in the agreement
The percentage assigned to you under the arrangement with your affiliated entities
The business number of each affiliated entity
The percentage assigned to each affiliated entity under the agreement
If there are more than 10 affiliated entities, only assign the percentages for the 10 largest entities.
You will be asked if you have completed the application at the end of the form. The application must be completed and filed within 180 days after the end of the claim period.
The bottom line
The CERS is a program that can be of help to a number of Canadian businesses and nonprofits in dealing with the negative impact of COVID-19. There are very specific criteria that applicants need to be aware of, including specific application periods and timeframes.
It is important to gather the required information prior to completing the application. Applicants should retain this information in case the agency has questions in reviewing your application.
Overall, the application portal is straightforward, though applicants should take their time to ensure that they don’t exclude any required information that might delay approval.
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