CRA comments on the deductibility of rent paid by a corporation for use of its shareholder’s home

Respecting the situation where a corporation deducts rent or reimbursement amounts paid for use of space in its shareholder’s home, CRA stated:

Generally, we would evaluate reasonableness in relation to the actual costs incurred by the shareholder. We would also expect, at a minimum, that the space is needed to file records, book appointments, take business phone calls and perform other administrative functions, as the case may be, and that there is no other space available to the corporation. …

[N]o mortgage interest or…CCA…should be claimed.

CRA also stated that the rents “would not generally be reported as rental income included on a T776.”

Neal Armstrong. Summaries of May 2016 Alberta CPA Roundtable, Q.15 under s. 15(1) and s. 67.