CRA notes that a sublease may in fact constitute a lease assignment

Although the definition of “qualifying rent expense” for CERS (rent subsidy) purposes generally includes a requirement that the rent be paid “under a written agreement entered into before October 9, 2020,” the definition also clarifies that an assignment of a pre- October 9, 2020 after that date is not problematic. CRA dealt with the situation where a sublease was signed prior to October 9, 2020, but the consent of the landlord was not obtained until later. CRA (citing Sussex Square) noted that the sublease would instead be an assignment of the leasehold interest of the sublessor if the purported sublease was for all of the sublessor’s remaining term as head tenant– so that it would not matter if the assignment was regarded as occurring after October 9, 2020.

On the other hand, if it indeed was a sublease then, given that “the only parties to the sublease are the sublessor and the subtenant” it would be plausible that the sublease took effect before the deadline, unless further considerations were engaged, for example, the sublease contained a condition stipulating that the agreement would not take effect until the signature of the landlord was procured.

Neal Armstrong. Summary of 14 January 2022 Internal T.I. 2021-0913891I7 under s. 125.7(1) – qualifying rent expense.