As enacted on November 19, 2020 by Bill C-9 (An Act to Amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy)), the Canada Emergency Rent Subsidy ("CERS") has provided a rent subsidy for businesses that experienced a drop in revenue during the COVID-19 pandemic. Under the CERS program, businesses applied for the rent subsidy on a monthly basis for each "qualifying period". On October 21, 2021, the Federal Government confirmed that the CERS program would not be extended beyond the October 23, 2021 qualifying period. Therefore, the final qualifying period for which businesses may make a claim under the CERS program is from September 26, 2021 to October 23, 2021. The deadline to submit a claim for this final period is April 21, 2022.

This article will address two pressing questions that commercial landlords and tenants in Ontario have about the implications of the expiry of the CERS program on their respective businesses:

  1. Moving forward, will there be alternative rent subsidy programs available to commercial landlords or tenants who are struggling due to the impacts of the COVID-19 pandemic?
  2. How will the expiry of the CERS program affect Ontario's moratorium on commercial distraint proceedings and landlords' rights of re-entry?

1. New rent-subsidy programs:

The Federal Government has the authority, under the Budget Implementation Act, 2021, No. 1, to extend the CERS rent subsidy program to November 20, 2021. Pursuant to its October 23, 2021 announcement, the Federal Government announced it intended to use this authority to continue to support certain businesses in industries that have been hit hardest by the effects of the COVID-19 pandemic. On November 24, 2021, the Federal Government proposed Bill C-2 (An Act to Provide Further Support in Response to COVID-19) which, if passed, will enact the support programs proposed by the Federal Government in its October 23, 2021 announcement1 . Pursuant to Bill C-2, support will come in the form of rent subsidies under two new programs: (1) The Tourism and Hospitality Recovery Program (the "THRP"); and (2) the Hardest-Hit Business Recovery Program (the "HBRP"). If passed, Bill C-2 would extend these programs to May 7, 2022 and provide the Federal Government with the authority to extend these programs even further through to July 2, 2022.

In addition to the two subsidy programs noted above, Bill C-2 would also enact a program to support businesses in the event of a public health lockdown, and would increase the monthly cap on eligible expenses under the new rent subsidy programs for those eligible for the programs after the expiry of CERS on October 23, 2021.

(a) The Tourism and Hospitality Recovery Program2

On October 21, 2021, the Federal Government announced it intended to continue to offer support for businesses in the tourism and hospitality industry which were deeply affected by the pandemic and who continue to struggle financially. If passed, Bill C-2 will formally enact the THRP. Pursuant to the proposed legislation, examples of eligible organizations for the THRP would include entities whose qualifying revenue for the qualifying periods was earned primarily (e.g. more than 50%) from:

  1. operating or managing a facility that provides short-term lodging (e.g. hotels, motels, etc.);
  2. preparing and serving meals, snacks and beverages made to order for immediate consumption on or off the premises (e.g. restaurants, food trucks, coffee shops, nightclubs, etc.);
  3. operating a travel agency or a tour operator;
  4. organizing, promoting, hosting, supporting or participating in events that meet the artistic or cultural interest of their patrons;
  5. operating or managing an amusement or theme park; and
  6. operating or managing a facility providing a service that enables patrons to participate in recreational activities (e.g. downhill and cross-country ski/snowboard, amateur sports clubs, etc.).

Note that the above list is not exhaustive of all entities who may be eligible for the THRP. See the link below for the full list.3

To qualify for this program, eligible organizations will be required to meet the following two conditions:

  1. an average monthly revenue reduction of at least 40% over the first 13 qualifying periods under the Canada Emergency Wage Subsidy (the "CEWS"); and
  2. revenue loss for the current month of at least 40%.

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Footnotes

1. https://www.canada.ca/en/department-finance/news/2021/11/government-introduces-legislation-to-create-jobs-andimplement-targeted-covid-19-support.html 

2. https://www.canada.ca/en/department-finance/news/2021/10/targeting-covid-19-support-measures.html 

3. https://www.canada.ca/en/department-finance/news/2021/11/types-of-business-eligible-for-the-tourism-and-hospitalityrecovery-program.html 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.