New Support For Commercial Tenants: Canada Emergency Rent Subsidy Replaces CECRA Program

October 15, 2020

On October 9, 2020, the Government of Canada announced a new rent support program, the Canada Emergency Rent Subsidy (“CERS”) that will fill the gap left by the expiry of the Canada Emergency Commercial Rent Assistance (“CECRA”) program on September 30, 2020. While key details of the CERS program have yet to be released, the Government of Canada’s announcement indicates that the new program will be more flexible and easier to access than CECRA.

Existing CECRA participants should note that they have until October 30, 2020 to apply for support through to the end of September, the final month of the program. For more information on CECRA, see our post here.

The CERS Program: What We Know So Far

The October 9, 2020 announcement emphasizes that CERS will be simpler to access than CECRA. In particular, the announcement noted the following:

  • CERS will support tenants directly, rather than requiring tenants to negotiate and enter into rent-reduction agreements with their landlords;
  • Rent expenses (or commercial mortgage interest expenses) of eligible businesses, charities and non-profits will be reimbursed, on a sliding scale, up to a maximum of 65% of eligible fixed property expenses (to be defined);
  • As with CECRA, eligibility for CERS will be contingent on a demonstrated decline in revenue;
  • A 25% top-up of the subsidy will be available specifically to businesses and other organizations that have been closed by mandatory public health orders;
  • CERS will also include unspecified support for property owners; and
  • CERS subsidies will be claimable retroactively to September 27, 2020.

No additional details have been released to this point. It is not yet clear, for example, how the 25% top-up will be calculated in relation to the base subsidy, what qualifies as an “order to close” or how closely the CERS eligibility standards will track the CECRA eligibility requirements.

Because the CERS program is intended to be responsive to changes in the seriousness of the pandemic, the program parameters announced by the federal government apply only until December 19, 2020, although CERS support is guaranteed to continue until June 2021.

It is anticipated that legislation implementing the CERS program will be introduced before Parliament shortly. The program will operate through the Canada Revenue Agency.

Extension of Related Federal Programs

In conjunction with the CERS announcement, the Government of Canada also announced extensions of the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Business Account (CEBA) loan program.

DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice.

Stay in Touch with Knowledge Hub