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Owners of rental properties suffered major financial difficulties during the COVID-19 pandemic. CRA has put together many emergency response benefits to help individuals and business owners. The type of benefit you are eligible for depends on the type of rental income you incur.
Rental Income or Business Income
If you rent a space in your principal residence or another dwelling and provide basic services such as utilities, parking, laundry facilities, or maintenance, you report the income as rental income.
When you provide additional services such as cleaning, meals, security, you report the income as business income. Your business might also operate with a business chequing account, and a CRA payroll account for your employees.
Support For Rental Income
CRA introduced different emergency responses to support you and your rental income during this difficult time, whether through Canada Emergency Response Benefit (CERB) or Canada Recovery Benefit (CRB). Both are similar programs, CERB applications ended on Sep 27th, 2020 then CRB became effective on the same day. To apply for CRB, you will have to check your eligibility first. You need to prove a reduction in your income of at least 50% from last year’s income for the same two week period you are applying for.
If you can’t perform at least 50% of your job duty because you are sick with COVID, you can apply for Canada Recovery Sickness Benefit (CRSB). However, if you can’t perform your job duty because you are taking care of a sick individual with COVID-19 or a child who is home as a result of school/daycare closure, you can apply for Canada Recovery Caregiving Benefit (CRCB).
Keep in mind that you cannot combine any of these benefits for the same period. You will receive a T4A – Statement of Pension, Retirement, Annuity and Other Income slip reporting different benefits you have received during COVID. Report these amounts on line 13000 of your income tax return:
- Box 197, Canada Emergency Response Benefit (CERB)
- Box 200, Provincial/Territorial COVID-19 financial assistance payments
- Box 202, Canada Recovery Benefit (CRB)
- Box 203, Canada Recovery Sickness Benefit (CRSB)
- Box 204, Canada Recovery Caregiving Benefit (CRCB)
Since the government had banned eviction during the pandemic to support renters in most provinces, the landlord will have to accept partial rents or no rents at all. If you are still paying a mortgage on your rental property, the federal government has made arrangements with mortgage providers to allow easier access to the Mortgage Payment Deferral program. If you have faced difficulties paying your mortgage as a result of income loss or reduced income due to COVID, you can defer your mortgage payments for up to 6 months (might be eligible for renewal).
Support For Business Income From a Rental Property
If you are running a business for your rental property, you are still eligible for the benefits explained above.
If you have employees running your rental business and have a payroll account with CRA and a chequing account with a financial institution, you might be eligible for the Canada Emergency Wage Subsidy (CEWS). The program will help you cover a portion of your employees’ wages as long as they have not applied for any other individual emergency benefit. Initially, you had to show a 15% reduction in revenue in the first period or a 30% reduction in the following periods to be approved for the program. Since July 2020, you only have to show a decrease in revenue, even if it is less than 30%. The rate of subsidy depends on the rate of revenue reduction.
You could also apply for Temporarily Wage Subsidy (TWS) to reduce the amount of payroll deductions for 3 months. This program covered the period from March 18th to June 19th, 2020. You can calculate your subsidy amount but you don’t need to send a special application for it. Once you have calculated your TWS, you can reduce your payroll remittance of federal, provincial, or territorial income tax you send to the CRA by the amount of the TWS. CRA will not calculate this amount for you. Payroll remittances made to Revenue Quebec are not eligible for TWS. The subsidy is equal to 10% of the remuneration you pay from March 18 to June 19, 2020, up to $1,375 for each eligible employee. The maximum total is $25,000 for each eligible employer.
Check this TurboTax link about support for other businesses during the COVID pandemic. For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.