Ontario Introduces a Rent Reduction Program to Assist Small Businesses

At the end of last month, it was announced that a new program would be put in place by the Ontario government to offer relief for landlords and small business owners. 

The program, Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA), will provide loans to commercial property owners in exchange for reducing rent for small business tenants by at least 75% with a freeze on evictions for three months. These loans will be forgivable.  

The Ontario government has so far committed $241 million to the OCECRA bringing the total amount of federal and provincial support up to $900 million. 

Eligible landlords would receive 50% of the rental cost as a forgivable loan while the remaining 50% would be paid equally by the landlord and tenant. 

The loan is administered by the CMHC (Canada Mortgage and Housing Corporation and is available until August 31, 2020, with retroactive support for April, May and June. 

If you are a commercial landlord and do not have a mortgage, there is an alternative plan which will be provided by the CMHC shortly. 

For eligibility requirements, please visit the Ontario website. 

In addition to this new rent support program for commercial landlords (and in turn small businesses), the provincial and federal government are also offering relief to businesses through the following means, to help support the economy through the tough times. 

1. Employer Health Tax Exemption – the exemption will be doubled to save businesses a total of $355 million through tax cuts 
2. Deferral of Tax Remittances – the government is lifting the penalties and interest on businesses who are late filing provincially administered taxes for 5 months starting April 1. This leaves $6 billion in cash flow in the economy
3. Postponement of Tax Reassessments – property taxes will not be reassessed until 2021
4. Deferral of Education Property Tax Remittance – municipalities will not be required to file the June 30 remittance for an additional 90 days results in $1.8 billion in deferrals 
5. Regional Opportunities Investment Tax Credit – to encourage investments in the economy, businesses that make eligible capital investments in specified areas where employment growth is below the provincial average with receive a tax credit 
6. Electricity Rates – the provincial government has suspended time of use rates for small businesses so that all hours are priced at the off-peak rate of 10.1 cents/kWh
7. Small and Medium-sized Enterprise Loan - $40 billion in funds have been dedicated to small and medium-sized business loans through Export Development Canada and Business Development Canada to help them meet cash flow requirements 
8. Business Tax Rate – while not in response to COVID-19, the Corporate Income Tax Rate has been reduced to 3.2% for 2020

If you are a commercial landlord or tenant looking for more information on the rental reduction program for small businesses, or have any other financial planning/tax needs please contact us today.