Principal Issues: Whether the owner of a qualifying property that operates a hotel, or other similar business like a motel or a bed and breakfast, would be considered to use its qualifying property primarily to earn rental income as described in paragraph (b) of the definition of “qualifying rent expense” in subsection 125.7(1) of the Act, such that the owner would not have any qualifying rent expense and therefore, would be prevented from claiming the CERS for that qualifying property.
Position: Question of fact
Reasons: Generally, any income earned from the use or occupation of a property or a right to use or occupy property is considered to be rental income. Where, in addition to basic services that are customarily supplied with rental of real or immovable property, an entity also provides significant additional services that are integral to the success of its ordinary activities, it is the CRA’s longstanding position that the operation of that entity would be earning income from the services provided instead of earning rental income for the use or occupation of the property.
