CRA confirms that a property can be bifurcated into a qualifying property and a residence for CERS purposes

The definition of “qualifying property” for Canada emergency rent subsidy (“CERS”) purposes excludes a self-contained domestic establishment (“SCDE”) that is used by the eligible entity or a person with whom it does not deal at arm’s length. CRA indicated that the fact that a particular property included a portion that was subject to the SCDE exclusion would not necessarily “preclude the remaining part of the property from being a qualifying property.” For example, if part of a building was used as a personal residence, the remainder of the building that was used as a store could potentially generate qualifying rent expense. (A particular example provided by CRA to this effect confusingly refers to the eligible entity as being the owner rather than the tenant of the property.)

Neal Armstrong. Summary of 17 May 2021 Internal T.I. 2020-0870041I7 under s. 125.7(1) – qualifying property.