On November 2, 2020, the Government of Canada introduced Bill C-9 entitled "An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy)" (the "Bill"). The draft Bill amends the Income Tax Act (Canada) to introduce the Canada Emergency Rent Subsidy ("CERS"). CERS is the spiritual successor to the Canada Emergency Commercial Rent Assistance ("CECRA"). Its purpose is to grant eligible entities relief for rent and mortgage interest relating to commercial real property in Canada. More specifically, CERS provides:

  1. a base subsidy the amount of which is generally determined by the decline in an eligible entity's monthly revenues, year-over-year, for the applicable calendar month; and
  2. an additional top-up subsidy called the "Lockdown Support," only available to certain eligible entities who are forced to temporarily close their business due to public health restrictions.

The subsidies can be effective retroactively to September 27, 2020.

At this time, the Bill is not yet final and is going through the legislative process. Accordingly, the Bill remains subject to change until it is enacted by the Federal legislature.

As of the date of this bulletin, here is what we know about CERS:

Qualifying Periods

The subsidies apply to any "qualifying rent expense" (discussed below) for any of the following "qualifying periods":

  • September 27, 2020, to October 24, 2020;
  • October 25, 2020, to November 21, 2020; and
  • November 22, 2020, to December 19, 2020.

The Government can add more qualifying periods ending no later than June 30, 2021; however, program parameters may vary.


The subsidies are available to "qualifying renters", which includes the following eligible entities:

  • Individuals
  • taxable corporations and trusts
  • registered charities (other than public institutions)
  • partnerships
  • other prescribed organizations that satisfy certain prescribed eligibility requirements

The qualifying renter must meet one of the following criteria:

  1. have a payroll account as of March 15, 2020, or have been using a payroll service provider;
  2. have a business number as of September 27, 2020 (and satisfy the Canada Revenue Agency ("CRA") that it is a bona fide rent subsidy claim); or
  3. meet other conditions that may be prescribed in the future.

Most importantly, to qualify for the subsidies for a particular qualifying period, the eligible entity must file an application with the CRA in prescribed form by no later than 180 days after the end of such qualifying period.

As a practical note, the qualifying renter does need to show a revenue decline during the qualifying period; its subsidy rate is determined based on its decline in current revenues for the applicable month, as compared to a prior reference period (detailed below).

Nature of the Base Subsidy

CERS subsidizes a portion of the qualifying renter's "qualifying rent expense" during qualifying periods. Qualifying rent expenses must relate to commercial real estate in Canada, which the qualifying renter uses in the course of its ordinary activities.

They are separated into two categories. First, for commercial tenants, the qualifying rent expense captures most items that are commonly considered to be rent under a commercial lease (i.e., gross rent, percentage rent, and amounts paid under a net lease) plus amounts received by the applicable landlord under CECRA which were applied against rent payable by the qualifying renter for the qualifying period, but only if those amounts would have otherwise been required to be refunded to the qualifying renter.

Qualifying rent expenses do not include:

  1. sales taxes;
  2. amounts paid in satisfaction of damages;
  3. amounts paid under a guarantee, security or similar indemnity covenant;
  4. payments arising due to a default under the lease by the qualifying renter;
  5. interest and penalties on unpaid amounts;
  6. fees payable for discrete items or special services; and
  7. reconciliation adjustment payments.

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