CRA implies that hair stylists’ chair rents might qualify as rent for CERS purposes

Regarding a query as to whether an amount paid by a barber or hairdresser (“Stylist”) as “chair rent” to the owner of a salon may be claimed as a “qualifying rent expense” for Canada emergency rent subsidy (“CERS”), CRA first indicated that the term “chair rent” may “refer to an amount paid for the use of, or right to use, a portion of the Salon,” and then stated:

Where an amount paid by a Stylist (who is an eligible entity) as “chair rent” is rent for the use of, or right to use, an area within the Salon that is real or immovable property such that it is capable of being a qualifying property, it may be a qualifying rent expense for the Stylist, provided all of the conditions in the definition of qualifying rent expense are met.

It is highly likely that the stylist would be a non-exclusive licensee of the salon space rather than a tenant, given the absence of a right of exclusive possession. Accordingly, these comments may imply that amounts paid by a licensee of space or a portion thereof could qualify as “rent.”

Neal Armstrong. Summary of 11 May 2021 Internal T.I. 2020-0869981I7 under s. 125.7(1) – qualifying rent expense.