Rent and property expenses you could claim
The rent subsidy covered a portion of eligible expenses in respect of a claim period for each qualifying property, up to certain maximums.
On this page
- Determine if your property qualified
- Which property expenses were eligible
- What non-arm's length means
- Who had eligible expenses in lease and sub-lease situations
Determine if your property qualified
Properties that qualified
Included any "real or immovable property" (buildings or land) in Canada that your business or organization:
- owned or rented, and
- used in the course of your ordinary activities
Properties that didn't qualify
- your home, cottage, or other residence used by you, your family members, or other non-arm’s-length persons
- any properties you owned that were primarily used to earn rental income from arm’s-length parties
- any properties that were primarily used to earn rental income directly or indirectly from a non-arm’s length party, that were primarily used by that party to earn rental income
Which property expenses were eligible
Maximum eligible expenses you could claim in each claim period
| Maximum eligible expenses | CERS Ended | THRP | HHBRP |
|---|---|---|---|
| Per business location | $75,000 | $75,000 | $75,000 |
| Total for all locations (Cap on base only. There was no maximum for the top-up subsidy.) |
$300,000 | $1,000,000 | $1,000,000 |
Eligibility criteria for expenses
- Only amounts paid or payable to an arm’s-length party can be included
- The expense must have been in respect of the claim period
- The expense must have been paid or payable under a written agreement entered into before October 9, 2020 (or a renewal on substantially similar terms or assignment of such an agreement)
If you had not paid the amounts due for your eligible expenses at the time you applied, you must have attested (confirmed) that these amounts would be paid within 60 days of receiving your rent subsidy payment.
You could not claim expenses that were paid or payable:
- to non-arm’s-length entities
- for a period that fell outside of the claim period you were applying for
If you earned any revenue from renting or sub-leasing space on the property to arm’s-length parties, you must have subtracted that revenue from your eligible expenses.
Your eligible expenses for qualifying properties you rented are different from those for qualifying properties that you owned.
What non-arm's length means
Related persons are deemed not to deal with each other at arm’s length. For non-related persons, it is a question of fact whether they are dealing with each other at arm’s length.
Learn more about what non-arm’s length means:
- Related individuals
- Corporations and other persons
- Other unrelated persons (Question of fact)
Examples
Related corporations – retail store
Hold Co and Retail Co are related corporations and therefore do not deal at arm’s length with each other.
Retail Co rents a building that is owned by Hold Co.
Retail Co pays rent to Hold Co for use of the building to operate its retail store. Retail Co uses the building for its business operations and does not use the building primarily to earn rental income.
Retail Co cannot claim the rent it pays to Hold Co for a rent subsidy because the rent is paid to a non-arm’s-length person.
Hold Co may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to Retail Co, as long as Hold Co meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Hold Co’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If Hold Co has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
One person owns 100% of a corporation’s shares
Mr. A owns 100% of the shares of Op Co.
Op Co rents a building that is owned by Mr. A.
Mr. A and Op Co are related persons since Mr. A controls Op Co.
This means that Mr. A and Op Co do not deal at arm’s length with each other.
Op Co cannot claim the rent it pays to Mr. A for a rent subsidy because the rent is paid to a non-arm’s-length person.
Mr. A may be able to claim a rent subsidy for eligible expenses in respect of the property he owns and rents to Op Co, as long as Mr. A meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Mr. A’s rent subsidy is calculated based on his own eligible expenses and not the commercial rent paid or payable by his non-arm’s length tenant(s).
If Mr. A has not experienced a drop in revenue based on his own qualifying revenue, he may still qualify by making use of one of the elective special rules for calculating eligible revenue.
A person with a controlling interest in a partnership
Mr. A has a controlling interest in Partnership A.
This means that Mr. A is not dealing at arm’s length with Partnership A.
Partnership A rents a building that is owned by Mr. A.
Partnership A cannot claim the rent it pays to Mr. A for a rent subsidy because the rent is paid to a non-arm’s-length person.
Mr. A may be able to claim a rent subsidy for eligible expenses in respect of the property he owns and rents to Partnership A, as long as Mr. A meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Mr. A’s rent subsidy is calculated based on his own eligible expenses and not the commercial rent paid or payable by his non-arm’s length tenant(s).
If Mr. A has not experienced a drop in revenue based on his own qualifying revenue, he may still qualify by making use of one of the elective special rules for calculating eligible revenue.
One corporation owns another corporation
Mr. A and Mrs. A (spouses) each own 50% of the shares of Hold Co.
Hold Co owns 100% of the shares of Op Co.
Op Co rents a building that is owned by Hold Co.
Mr. A and Mrs. A are related by virtue of marriage. Mr. A and Mrs. A are a related group that controls Hold Co.
Because Hold Co owns all of the shares of Op Co, Hold Co controls Op Co.
This means that Hold Co and Op Co do not deal at arm’s length.
Op Co cannot claim the rent it pays to Hold Co for a rent subsidy because the rent is paid to a non-arm’s-length person.
Hold Co may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to Op Co, as long as Hold Co meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Hold Co’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If Hold Co has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
Corporation owned equally between unrelated persons
Mr. A, Mr. B, and Mr. C are not related. They each own 1/3 of the voting shares of Op Co.
Op Co rents a building that is owned by Mr. C.
Mr. C and Op Co are not related.
It is a question of fact whether Mr. C and Op Co are dealing at arm’s length. Additional factors will need to be considered.
For example, if Mr. C and Op Co are acting in concert without separate interest in respect of the rental transaction they may not be dealing at arm’s length.
If Mr. C and Op Co are not dealing at arm’s length, it means that Op Co will not be able to claim the rent that it pays to Mr. C for a rent subsidy.
Mr. C may be able to claim a rent subsidy for eligible expenses in respect of the property he owns and rents to Op Co, as long as Mr. C meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Mr. C’s rent subsidy is calculated based on his own eligible expenses and not the commercial rent paid or payable by his non-arm’s length tenant(s).
If Mr. C has not experienced a drop in revenue based on his own qualifying revenue, he may still qualify by making use of one of the elective special rules for calculating eligible revenue.
One person owns 2 corporations
Mr. A owns 100% of the shares of Op Co and 100% of the shares of Hold Co.
Op Co rents a building that is owned by Hold Co.
Op Co and Hold Co are related, because both corporations are controlled by the same person (Mr. A).
Op Co and Hold Co do not deal at arm’s length.
Op Co cannot claim the rent it pays to Hold Co for a rent subsidy because the rent is paid to a non-arm’s length person.
Hold Co may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to Op Co, as long as Hold Co meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Hold Co’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If Hold Co has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
Separate corporations owned by spouses
Mr. A owns 100% of the shares of ABC Inc. Mrs. A (Mr. A’s spouse) owns 100% of the shares of XYZ Inc.
ABC Inc. rents a building that is owned by XYZ Inc.
ABC Inc. and XYZ Inc. are related since the individual that controls ABC Inc. (Mr. A) is married to the individual that controls XYZ Inc. (Mrs. A).
Therefore, ABC Inc. and XYZ Inc. do not deal at arm’s length.
ABC Inc. cannot claim the rent it pays to XYZ Inc. for a rent subsidy because the rent is paid to a non-arm’s-length person.
XYZ Inc. may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to ABC Inc., as long as XYZ Inc. meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
XYZ Inc.’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If XYZ Inc. has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
One person is related to each person in an unrelated group
Mr. A owns 100% of the shares of ABC Inc.
Mr. X and Mr. Y (both grandchildren of Mr. A) each own 50% of the shares of XYZ Inc.
Mr. X and Mr. Y are cousins who act in concert to control XYZ Inc. Cousins are not related for tax purposes.
ABC Inc. rents a building that is owned by XYZ Inc.
Mr. A controls ABC Inc., and XYZ Inc. is controlled by an unrelated group.
However, ABC Inc. and XYZ Inc. are related because Mr. A is related to each member of the unrelated group that controls XYZ Inc. – his grandchildren .
Therefore, ABC Inc. and XYZ Inc. do not deal at arm’s length.
ABC Inc. cannot claim the rent it pays to XYZ Inc. for a rent subsidy because the rent is paid to a non-arm’s-length person.
XYZ Inc. may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to ABC Inc., as long as XYZ Inc. meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
XYZ Inc.’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If XYZ Inc. has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
Unrelated groups include people who are related to members of the other group
Mr. A and Mr. B are not related and each own 50% of the shares of Op Co. Mr. A and Mr. B act in concert to control Op Co.
Mrs. A and Mrs. B (spouses of Mr. A and Mr. B) each own 50% of the shares of Hold Co. Mrs. A and Mrs. B act in concert to control Hold Co.
Op Co rents a building that is owned by Hold Co.
Op Co and Hold Co are related because each member of the unrelated group that controls Op Co is related to at least one member of the unrelated group that controls Hold Co.
Op Co and Hold Co do not deal at arm’s length.
Op Co cannot claim the rent it pays to Hold Co for a rent subsidy because the rent is paid to a non-arm’s-length person.
Hold Co may be able to claim a rent subsidy for eligible expenses in respect of the property it owns and rents to Op Co, as long as Hold Co meets all of the eligibility criteria to receive a rent subsidy and the property is a qualifying property.
Hold Co’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If Hold Co has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
Who had eligible expenses in lease and sub-lease situations
If a property owner leased their property to another party, they or their tenant may have expenses that are eligible for a rent subsidy.
Eligibility will depends on
- Who the tenant was – for example, is the tenant dealing at arm’s length with the landlord?
Read about non-arm’s length examples - How the property was used
A property owner may have had expenses that were eligible for a rent subsidy for a property that they used to carry out the ordinary activities of their business or organization.
If a property owner used the property primarily (more than 50%) to earn rental income from an arm’s length tenant, their expenses were not eligible for a rent subsidy. In that case, their tenant may have been eligible for a rent subsidy.
If a property owner used the property primarily to earn rental income from a non-arm’s length tenant, their expenses may have been eligible for a rent subsidy as long as the non-arm’s length party was not using the property primarily to earn rental income.
Examples of lease and sub-lease situations and who may have eligible expenses in each case
If the entire property is rented:
-
Landlord A (the property owner) leases the entire property to Tenant B
Landlord A and Tenant B deal at arm’s length.
- Tenant B may have expenses that are eligible for a rent subsidy because their rent is paid to an arm’s length party.
- Landlord A does not have expenses that are eligible for a rent subsidy because they use the property primarily to earn rental income.
-
Landlord C (the property owner) leases the entire property to Tenant D
Landlord C and Tenant D do not deal at arm’s length.
Tenant D is using the entire property to carry out the ordinary activities of their business and is not sub-leasing any portion of it.
- Landlord C may have expenses eligible for a rent subsidy because Tenant D is not using the property primarily to earn rental income.
- Tenant D does not have expenses that are eligible for a rent subsidy because the rent is paid to a non-arm’s length party.
-
Landlord E (the property owner) leases the entire property to Tenant F
Landlord E and Tenant F do not deal at arm’s length.
Tenant F then leases the entire property to Tenant G.
Tenant F and Tenant G deal at arm’s length.
- Tenant G may have expenses that are eligible for a rent subsidy because the rent is paid to an arm’s length party.
- Landlord E does not have expenses that are eligible for a rent subsidy because they use the property primarily (more than 50%) to earn rental income from non-arm’s length Tenant F, and Tenant F is using the property primarily to earn rental income.
- Tenant F does not have expenses that are eligible for a rent subsidy because the rent is paid to a non-arm’s length party.
If only a portion of the property is rented:
-
Landlord H (the property owner) uses 80% of the property and leases the other 20% to Tenant J
Landlord H and Tenant J deal at arm’s length.
Both Landlord H and Tenant J may have expenses that are eligible for a rent subsidy:
- Landlord H may have expenses that are eligible for a rent subsidy because the property is not used primarily (more than 50%) to earn rental income. Landlord H must subtract the rental income they earned from Tenant J from the property’s eligible expenses.
- Tenant J may have expenses that are eligible for a rent subsidy because the rent is paid to an arm’s length party.
-
Landlord K (the property owner) uses 80% of the property and leases the other 20% to Tenant L
Landlord K and Tenant L do not deal at arm’s length.
- Landlord K may have expenses that are eligible for a rent subsidy because the property is not used primarily (more than 50%) to earn rental income. They do not need to subtract the rental income they earn from the property’s eligible expenses because it is leased to a non-arm’s length party.
- Tenant L does not have expenses that are eligible for a rent subsidy because the rent expense is paid to a non-arm’s length party.
Lockdown support for eligible property owners with non-arm’s-length tenants
The lockdown support top-up for the THRP and HHBRP may have been available to eligible property owners with non-arm's-length tenants, if all of the following conditions were met:
- the tenant used the qualifying property in the course of its regular activities
- that property was subject to a lockdown
- the tenant had to shut their doors or significantly restrict their activities under a public health restriction
- the property owner met all other applicable conditions required to qualify for the lockdown support top-up
The lockdown support top-up for an eligible property owner with tenants not at arm’s-length is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
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