The federal government has tabled Bill C-9 which proposes to extend the Canada emergency wage subsidy (CEWS) and introduce two new rent subsidies.
The government intends to extend the CEWS until June 2021. As such, the bill proposes to authorize the government to extend the CEWS beyond December 19 and to modify the base and top-up subsidy rates at its discretion. The bill also proposes to maintain the base subsidy rate at 40% until December 19, and to harmonize the revenue-decline tests for the base subsidy and top-up subsidy.
Bill C-9 also proposes to enact the Canada emergency rent subsidy (CERS) and the lockdown support. These two rent subsidies are available for periods 8 to 10, which span from September 27 to December 19, but the government may extend the subsidies at its discretion. The CERS will subsidize up to 65% of a qualifying entity’s rent; the rent subsidy percentage depends on the entity’s revenue reduction percentage for the period. An entity cannot claim more than $300,000 of qualifying rent expenses for the CERS in a qualifying period. This $300,000 limit must also be shared among affiliated entities. The lockdown support subsidizes an additional 25% of qualifying rent expenses if the property is subject to a public health restriction.
Qualifying rent expenses include gross rent, rent based on sales, and certain amounts paid under a net lease. If an entity owns a property, its qualifying rent expenses can include mortgage interest, insurance, and property taxes. Qualifying rent expense is limited to $75,000 per qualifying property per qualifying period. Claimable expenses are reduced by any rental income that the entity earns in the period with respect to the property.
Since the CERS and lockdown support will be effective as of September 27, entities can make retroactive applications for these subsidies. The CRA has not yet specified when it will begin accepting retroactive applications.
