History of Canadian Government COVID-19 Rent Relief
On April 24, 2020, the Government of Canada introduced the Canada Emergency Commercial Rent Assistance (CECRA) program. The CECRA program, which was run through the Canada Mortgage and Housing Corporation (CMHC), was set up to provide relief to eligible commercial tenants by reducing their gross rent by at least 75% over the months of April, May and June 2020 (this time period was ultimately extended until the end of October 2020). The federal and provincial governments paid 50% of the gross rent otherwise payable during these months in the form of a forgivable loan to landlords.
New Canadian Government COVID-19 Rent Relief
On October 9, 2020, the Government of Canada announced a new rent support program, the Canada Emergency Rent Subsidy (CERS) program, which replaced CECRA. The CERS program is aimed at supporting tenants directly, thus avoiding situations where commercial landlords elected not to participate in CECRA, to the detriment of the small business tenants. The CERS program is mirrored closely on the Canadian Emergency Wage Subsidy program (CEWS), and Bill C-9 (referenced below) extends the duration of CEWS, as well.
On November 2, 2020, the Government of Canada formalized the CERS program by tabling Bill C-9, An Act to Amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy). This Bill was passed by the House of Commons on November 6, 2020.
Should Bill C-9 be approved by the Senate as presently drafted, it will run until June 30, 2021. Organizations can make claims retroactively for the period beginning September 27, 2020 and running until October 24, 2020, with additional periods of October 25, 2020 to November 21, 2020 and November 22, 2020 to December 19, 2020, also having been announced.
Highlights of the CERS Program
While certain details of the CERS program remain to be provided, the highlights are as follows:
- Unlike CECRA, qualifying businesses (known as “qualifying renters”) can now access rent support directly, and not through their landlords.
- Under CERS, the term “qualifying renters” also includes businesses that own real property; however, the amount receivable under CERS by these entities would be reduced by amounts that are received or receivable as rent, whether directly or indirectly, from arm’s length parties.
- Subsidies will be given to businesses, charities and non-profits that have suffered a revenue drop, on a sliding scale, up to a maximum of 65% of eligible expenses (e.g. rent, property insurance, property taxes and interest on commercial mortgages), with up to a maximum of $75,000 at any one location and $300,000 overall.
- The subsidies’ sliding scale can be summarized as follows:
- 65%, where decline in revenue is 70% or greater.
- 40% + (Revenue Decline – 50%) x 1.25, where decline in revenue is between 50% to 69%.
- Revenue Decline x 0.8, where decline in revenue is below 50%.
- In addition to the subsidy, there will be a new “top-up revenue reduction percentage” which provides a top-up of 25% for organizations temporarily or partially shut down, for a period of at least one week, by a mandatory public health order issued by a qualifying public health authority (which includes federal, provincial, municipal, and regional authorities).
- The Bill, as presently adopted by the House of Commons, would require businesses to pay their rent before applying for the subsidy retroactively. This may well result in certain businesses not being capable of accessing CERS due to a lack of cash flow.
At present, the CERS program parameters apply until December 19, 2020 and may be adapted in 2021 as needed. As noted above, in conjunction with the CERS announcement, extensions on CEWS and the Canada Emergency Business Account (CEBA) loan program were also announced.
Provincial Programs in Place to Supplement CERS
British Columbia
No supplement announced. There was an order that supplemented CECRA, but it has since expired.
Alberta
No supplement announced. There was an order that supplemented CECRA, but it has since expired.
Saskatchewan
No supplement announced. There was a temporary commercial eviction ban for small businesses in conjunction with CECRA that has since ended.
Manitoba
No supplement announced. There was a Commercial Rent Assistance joint program in conjunction with CECRA, but it expired on September 14, 2020.
Ontario
The Ontario Government has announced that it is making $300,000,000 available to businesses required to close or significantly restrict services in areas subject to modified Stage 2 public health restrictions (Ottawa, Peel, Toronto, and York Region) or, going forward, in areas categorized as “Control” or “Lockdown.”
Rebates will cover the periods of time that businesses are required to temporarily close or significantly restrict services as a result of being located in such areas. Of particular interest is the fact that property tax rebates will be net of any federal support in respect of property taxes provided through CERS, so that the rebate will cover costs beyond those covered by CERS.
Beginning November 16, 2020, eligible businesses (which include restaurants, bars, gyms and cinemas) will be able to apply for temporary property tax and energy cost rebates directly to the province through a single, online application portal. Many businesses should expect to receive their rebate payments within a few weeks of finalizing and submitting their completed application.
Quebec
On November 2, 2020, the Quebec Government confirmed that an enhancement to CECRA for Quebec landlords who had qualified for CECRA loans is now available. The funds will be paid via the CMHC, in the same manner as had been the case for the forgivable CECRA loans. Accordingly, owners of commercial buildings located in Quebec who have committed to absorb a 25% gross rent loss by registering with CECRA will receive an amount equivalent to 12.5% of their total gross rent during the applicable target months, which will reduce their losses by half.
Quebec has also adopted various financial assistance programs to assist certain Quebec businesses, including the Assistance for Businesses in Regions Under Maximum Alert (ABRUMA), the Emergency Assistance for Small-and-Medium-Sized Businesses (PAUPME) and the Concerted Temporary Action Program for Businesses (PACTE).
New Brunswick
No supplement announced.
Nova Scotia
No supplement announced. There was a rent deferral support program, however, it expired on June 30, 2020.
Prince Edward Island
No supplement announced. There was a Commercial Lease Rent Deferral Program, but it has since expired.
Newfoundland and Labrador
No supplement announced.
For more information or specific advice relevant to your circumstances, please contact one of the following persons:
- Steven Chaimberg (Montreal)
- Joshua Selby (Calgary)
- Stuart Chaimberg (Toronto)
