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Bookkeeping for Canadian COVID-19 Subsidies


CANADIAN EMERGENCY COMMERCIAL ASSISTANCE PROGRAM (CECRA)

What is it?

A Government of Canada program that provides affected businesses with rent relief of 75% - whereby the Government of Canada and the landlord cover 75% of the rent payment and the tenant covers 25% of the rent payment.  The program is eligible for April, May, June and July and businesses have had to have steep revenue declines (70%).

To determine eligibility, please read the program overview carefully.

How to record it

*This will depend on whether you received a refund of rent already paid for the corresponding months or whether you receive a future rent credit.  In addition, there are sales tax implications and some rent (25% most likely) has to still be recorded*

If you receive a refund of rent already paid

Step 1: Create an ‘Other Income’ chart of account

  • Use a simple naming convention so that you can keep track of the subsidy.

  • For example, name it ‘CECRA Subsidy’ or similar.  

Step 2: When the funds are deposited into the business bank account, code them to this new account you just created.

Step 3: Run a ‘Profit and Loss’ (Income Statement) report to ensure the transaction was recorded accurately.

If you receive a credit for next month’s rent

If you paid rent and the landlord was providing you with a rent credit for subsequent months, then again, you would follow the flow funds from the bank statement.  Rent expense would be recorded when paid and for the subsequent month, you would show no rent expense (since the month, in essence, is rent-free).

For the CECRA subsidy, you may have a combination of the above (i.e. rent paid and a refund or credit all in one month).  You’ll have to just break it down and record each transaction separately and you should arrive at the desired result.

Good luck on your bookkeeping journey!

Feel free to add comments below and we can try to respond with some answers and insights.