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November 23, 2020
By Nizam Shajani, CPA, CA, MBA
Canadian businesses, non-profit organizations and charities that have a drop in revenue due to COVID-19 may be eligible for a rent subsidy for the period between September 27, 2020 and June 2021 The first claim period will be retroactive to September 27 through October 24, 2020.
The base subsidy is determined by the decrease in revenues. Use the current period revenues and compare to either the corresponding month in 2019 or the average monthly revenues in January and February 2020.
Revenue drop Rate used
70% or more 65%
50% to 70% (Revenue drop – 50%) x 1.25 + 40%
Less than 50% 0.8 x revenue drop
If you were forced to lock down your business, there is an additional lock down support top-up in addition to the above base subsidy.
(Days locked down / 28) x 25%
You can claim up to a maximum of $75,000 per business location and a total of $300,000 for all locations for each claim period.
You may claim a portion of the cost of your business locations that are qualifying property. This includes property that your business owns or rents and uses in the ordinary course of business activities. This specifically excludes your home, cottage or other residence used by you or your family members or non-arm’s length persons as well as any properties you own that are primarily used to earn rental income from arm’s length parties.
The amounts must be paid or payable to arm’s length parties under a written agreement in place prior to October 9, 2020.
If you rent:
Include your base rent, operating costs, property taxes and regular payments made to your landlord for ancillary services.
Do not include GST/HST, damages, interest or penalties or any special amounts.
If you own:
Include property taxes, property insurance and interest on commercial mortgages.
Do not include payments to non-arm’s length entities. Revenues from subleases must be subtracted from the eligible expenses.
How to apply?
You can apply via My Business Account on CRA’s website.
Similar to a business number, you will need a rent subsidy number. This can be requested at the time of application.
You will need the amounts you owe or paid for all eligible expenses, the property address and contact information for your mortgage holder or your landlord.
Shajani LLP is happy to assist you with the rent subsidy calculation. You can also find additional information on CRA.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP