CRA discusses the “lowest total principal amount” limitation on the CERS subsidy for owners’ mortgage interest
The Canada emergency “rent” subsidy (CERS) has generally extended to owners of qualifying property used in their operating businesses respecting their mortgage interest expense. One of the numerical limitations noted in A- s. (b)(i)(A) of the qualifying rent expense definition generally limits the eligible interest for these purposes to that on the lowest total principal amount secured by one or more mortgages (provided the mortgage has an amortization period) on the qualifying property at any time after it was acquired by the eligible entity (provided that such total does not exceed the qualifying property’s cost amount). Regarding the “lowest total principal amount,” CRA noted that if, for example, in a prior period, there had been a refinancing that significantly increased the aggregate, the lowest aggregate likely would be in this prior period, with a likely resulting reduction in the eligible amount of interest paid in the subsequent qualifying period being tested. CRA also noted that the requirement for an amortizing period signified that a mortgage without an amortization period would be excluded from the total.
CRA indicated that the cost amount of a building (and thus this further limitation under the formula) would reduce over time with CCA claimed.