On October 9, 2020, the Federal Government announced new rent relief measures for businesses facing financial hardship due to COVID-19. The new Canada Emergency Rent Subsidy (CERS) replaces the Canada Emergency Commercial Rent Assistance (CECRA) program, and will provide financial assistance in the form of subsidies for rent and mortgage interest to Canadian businesses, charities and non-profits suffering revenue decreases due to the pandemic.

The CERS was introduced on November 2, 2020 as part of Bill C-9 An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) (Bill C-9) and is subject to change throughout the legislative process. It is anticipated that additional details, technical interpretations and ministerial guidance will be issued to assist applicants in the near future.

What you need to know

  • The new CERS will provide financial support to qualifying tenants and property owners retroactively from September 27, 2020, until June 2021.
  • CERS will subsidize a portion of eligible applicants' expenses, up to a maximum of 65 per cent.
  • For businesses forced to temporarily shut down by a mandatory public health order, an additional 25 per cent top up is available.
  • Bill C-9 has only passed first reading. Full details with respect to the application process will follow.

What is the CERS?

Intended to pick up where the CECRA program left off, CERS is designed to "provide direct and easy-to-access rent and mortgage interest support"1 for businesses, charities and non-profits impacted by the COVID-19 pandemic.

CERS is composed of two components:

  1. A rent subsidy; and
  2. An additional top-up payment, referred to as the "Lockdown Support", for qualifying organizations who are subject to a lockdown forcing them to temporarily close their doors or limit activities.

Combined, this could result in rent or mortgage interest supports of up to 90 per cent for hard-hit businesses.

Who is eligible?

Unlike the CECRA, which was only accessible to property owners, CERS benefits will be available to qualifying entities, including both qualifying landlords andtenants who have suffered revenue drops.

Qualifying entities include corporations, charities and non-profits meeting certain eligibility requirements.2

A "qualifying rent expense" generally means, rent or mortgage interest expenses in respect of a qualifying property (generally, real estate in Canada used by the entity in the course of its ordinary activities), net of any amounts received or receivable by the qualifying entity from non- arm's length parties.

For tenants, qualifying rent expenses for a particular qualifying property would include amounts up to $75,000 paid under a written agreement (or renewal or assignment of a written agreement), e.g. a lease agreement, entered into before October 9, 2020, including:

  • Gross rent;
  • Percentage rent;
  • Amounts paid under a net lease; and
  • Certain amounts received by the landlord under the CECRA program that were applied during the "qualifying period" (as defined below), if those amounts would otherwise be required to be refunded to the tenant.

Excluded are:

  • Sales taxes;
  • Amounts paid in lieu of or in satisfaction of damages;
  • Amounts paid under a guarantee, security, or similar indemnity or covenant;
  • Payments arising due to default;
  • Interest and penalties on unpaid amounts;
  • Fees payable for discrete items or special services; and
  • Reconciliation adjustment payments.

For commercial landlords, "eligible rent expenses" includes mortgage interest, insurance costs paid in respect of the qualifying property and property and similar taxes, including municipal and school taxes in respect of the qualifying property, up to $75,000.

How is the subsidy calculated?

Base subsidy

CERS benefits are intended to be flexible, and will be calculated in part as a function of the revenue drop experienced by the applicant in relation to a prior reference period, expressed as a percentage (the revenue reduction percentage). For instance, for applications for the period from September 27, 2020 to October 24, 2020, the revenue reduction percentage would be calculated based on the decline in revenue in October 2020 over October 2019.

Applicants' rent subsidy percentage is determined with reference to the revenue reduction percentage, with the maximum rent subsidy of 65 per cent of eligible expenses available to applicants who have experienced a revenue reduction of 70 per cent or more.

The subsidy will be calculated retroactively for each "qualifying period", with the first two qualifying periods being:

  • September 27, 2020 to October 24, 2020; and
  • October 25, 2020 to November 21, 2020

Lockdown Support

In the event of a lockdown or other mandatory public health order by a Federal or Provincial authority forcing a qualifying organization to temporarily shut down or suspend or limit operations at (or in relation to) the particular property in respect of which the subsidy is claimed, for a minimum of one week due to COVID-19, an additional amount (the rent top-up percentage) of 25 per cent of eligible expenses is available. Lockdown Support payments will only apply in respect of the actual duration of the shut down, and not the entire qualifying period.


Although Bill C-9, which introduces the CERS, has passed first reading, the program has not yet passed into law. Many details of the program, including details with respect to eligible expenses, the application process and payment mechanisms, have yet to be released.


1 Department of Finance Canada News Release, "Government introduces legislation for new, targeted support to help businesses through pandemic", November 2, 2020.

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