CRA finds that the purchase and rental of furniture in a furnished apartment is assimilated to the apartment rental activity

S. 149(1)(o.2)(ii)(A)(II) permits a s. 149(1)(o.2) (pension-group) corporation to invest its funds in “a partnership that limits its activities to acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest in real property … owned by the partnership”. CRA indicated that this test would not be breached by virtue of the partnership renting furnished suites in a students’ residence assuming that the furniture was such as “is ordinarily and customarily found in rental apartment units for students.” CRA stated:

[T]he Limited Partnership’s proposed acquisition and ownership of the Furniture for the purpose of furnishing the rental units in the Residence would not be a distinct activity that is separate from its activity of leasing real property.

Presumably the same approach applies to the investment/real estate undertaking test in s. 132(6)(b). (See also 2018-0784701E5 - renting furnished apartments gave rise exclusively to rents.)

Neal Armstrong. Summary of 15 September 2020 External T.I. 2020-0854471E5 under s. 149(1)(o.2)(ii)(A).