Covid-19 – New Rental Subsidy and Support Program (December 2020)
Happy New Year. Christmas has just past, and while Santa may not have been able to make his usual rounds due to the pandemic and limited travel, the federal government stepped into issue extensions and improvements to pandemic support over the past several months.
For Individuals and the Self-Employed – Transition from CERB to EI
As you may know, the Canada Emergency Response Benefit (CERB) ended after 28 weeks of benefits or on October 3rd, whichever came first. As of September 27, there were some changes to the Employment Insurance (EI) program that are intended to facilitate access to EI benefits for individuals who still need financial assistance. The changes are in effect for one year.
If you received the CERB through Service Canada, you should continue completing reports even after you receive your last CERB payment and you shouldn’t need to apply for EI. Your file will automatically be reviewed for eligibility and you will be contacted if you don’t qualify.
However, you will need to apply for EI if you:
- Have a Social Insurance Number that begins with “9”
- Are self-employed
- Stated on your CERB report that you had returned to work full time.
If you received CERB through the Canada Revenue Agency, you can apply for EI after the end of your last CERB eligibility period.
For Businesses and Employers
Canada Emergency Rent Subsidy
Formerly known as the Canada Emergency Commercial Rent Assistance (CECRA), the new Canada Emergency Rent Subsidy (CERS) attempts to right the wrongs of its predecessor program by allowing both property owners and tenants to apply directly for rent/mortgage support. With the CECRA, only property owners could apply. In addition, the CECRA required a 75% decline in revenue to be eligible for support.
There are two components to CERS:
The new CERS, announced on October 9th, will provide support to active businesses that see a decline in revenue based on a sliding scale and up to a maximum of 65% of eligible expenses (e.g. rent and interest on commercial mortgages). The CERS will apply retroactively from September 27, 2020 to June 2021 to qualifying organizations, and the subsidy application for September 27, 2020 to October 24, 2020 are now open. The relief is not available to residential and commercial landlords unless a commercial property is rented to a non-arm’s length party.
There is a maximum of $75,000 in eligible expenses that can be claimed per qualifying period, per location and a maximum of $300,000 in eligible expenses that can be claimed in a qualifying period by a group of affiliated companies.
Until December 19, 2020, there is also an additional 25% subsidy for businesses or organizations ordered to shut down temporarily by a qualifying public health authority, meaning an eligible business could be subsidized for up to 90% of rent/mortgage expenses. There is a maximum of $75,000 in eligible expenses that can be claimed per qualifying period, but no limit on the number of locations.
Canada Emergency Wage Subsidy (CEWS)
As of November 19th, the government has extended the CEWS program to June 2021, with the subsidy remaining at the current rate of up to 65% of eligible wages until June 17, 2021. In terms of calculations, starting in period 8, the top-up rate and base rate can now be calculated using the same one-month revenue drop (see previous newsletter).
The application deadline is January 31, 2021, or 180 days after the end of the claim period, whichever is later. Based on this, claim periods 1 through 5 have a deadline of January 31, 2020. Deadlines for other claim periods are:
- Claim Period 6 – February 25, 2021
- Claim Period 7 – March 25, 2021
- Claim Period 8 – April 22, 2021
- Claim Period 9- May 20, 2021
- Claim Period 10- June 17, 2021
Canada Emergency Business Account (CEBA)
Previously, the government expanded the CEBA loan to provide an additional $20,000 interest-free loan, with half of the additional loan being forgivable if repaid by December 31, 2022. For eligible businesses, this means a total forgivable amount of $20,000 on a $60,000 loan. The application deadline for the CEBA is December 31, 2020.
Stay tuned as this pandemic looks like it has staying power and will adversely affect our economy for some time, requiring the ongoing assistance of the government. Hopefully, 2021 will bring this new normal we hear so much about (and better support for our friends in the restaurant industry)!