CRA finds that CECRA loans do not disqualify a s. 149(1)(o.2)(ii) corporation nor lead to deregistration of an RPP

S. 149(1)(o.2)(ii)(C) stipulates that a s. 149(1)(o.2)(ii) corporation has “borrowed money solely for the purpose of earning income from real property or an interest [therein].” Reg. 8502(i) provides that a registered pension plan (RPP) shall not borrow money, subject to what CRA correctly describes as “two very narrow exceptions.”

The CECRA program contemplates the making of loans to commercial landlords to partially fund their providing rent relief to qualifying tenants, followed by forgiveness of such loans on December 31, 2020 if the landlord has complied with the program terms. CRA states:

  • Participating in the CECRA with respect to commercial property held by a pension real estate corporation will not contravene the borrowing restriction in clause 149(1)(o.2)(ii)(C).
  • Although participating in the CECRA by an RPP will contravene the narrower borrowing restriction in paragraph 8502(i), the CRA will exercise its discretion to not revoke the registration of an RPP for failure to comply with this condition.

Neal Armstrong. Summaries of 15 June 2020 External T.I. 2020-0850981E5 under s. 149(1)(o.2)(ii)(C) and Reg. 8502(i).