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Canada: Proposed legislation, rent subsidy clarity and child benefit enhancement

Canada: Proposed legislation, rent subsidy clarity

Bill C-14 would allow Canada emergency rent subsidy (CERS) prior to payment of certain eligible expenses and would introduce enhanced Canada child benefits.

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  • The new legislation would give eligible claimants access the CERS prior to the payment of certain eligible expenses, and includes measures to allow eligible entities to claim the subsidy for certain eligible expenses when the amounts are due (rather than when they are paid, if certain conditions are met).
  • The bill also provides additional temporary support for families entitled to the Canada child benefit.

These measures received first reading in the House of Commons on 2 December 2020, with enactment expected soon.

Background

The CERS generally allows eligible businesses, charities, and non-profits that have suffered a revenue drop to claim a subsidy of up to 65% of eligible expenses. Eligible expenses for a qualifying period may include (with exceptions) commercial rent, property taxes, property insurance, and interest on commercial mortgages (subject to limits). Further, the government also instituted a “lockdown support subsidy” of 25% of eligible expenses for organizations temporarily shut down due to a mandatory qualifying public health order. The CERS and lockdown support subsidy were enacted as part of Bill C-9, effective beginning September 27, 2020. These rules required amounts to be paid in order to qualify as eligible expenses; however, Finance announced intentions to introduce additional legislation to allow eligible entities to claim the subsidy when they became due (instead of when they were paid) as long as certain conditions were met. The CRA also announced that it would process claims on this basis.

Finance delivered the 2020 Fall Economic Update on 30 November 2020, that includes new measures that affect corporate and individual (personal) taxpayers and extends several COVID-19 relief measures, including the CERS and the lockdown support subsidy to 13 March 2021 (as well as a temporary increase to the amount of the Canada child benefit for 2021).

Measures introduced in Bill C-14

Canada emergency rent subsidy (CERS)

Bill C-14 includes a new rule that would deem that an eligible entity has paid the eligible expense on the date it first became due, as long as the eligible entity attests that it intends to (and does) pay the amount within 60 days of receiving the subsidy. The new “deeming rule” provides relief for claimants who would otherwise have had to pay an amount within a particular qualifying period for the amount to be considered an eligible expense on which they could claim the subsidy.

Canada child benefit payments

Bill C-14 also would introduce additional Canada child benefit payments, allowing eligible families with four additional amounts (up to a total of $1,200*) in 2021. Quarterly payments would be provided in January, April, July or October 2021 as follows:

  • A family with a net income of $120,000 or less would be eligible to receive $300 per child under the age of six.
  • A family with a net income above $120,000 would be eligible to receive $150 per child under the age of six.


Read a December 2020 report prepared by the KPMG member firm in Canada

*$=Canadian dollar

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