Income Tax Severed Letters - 2022-02-02

Technical Interpretation - Internal

20 January 2022 Internal T.I. 2021-0877511I7 - CERS- Written Agreement

Unedited CRA Tags
125.7
a lease could constitute a continuation of an agreement to lease
Words and Phrases
written agreement
agreement to lease entered into before cut-off date complied if it contained the essential binding terms

Principal Issues: Whether a letter of understanding to lease real property is a “written agreement” for purposes of the CERS.

Position: Question of fact.

Reasons: A “written agreement” is not defined in the Act. In general, a written agreement requires mutual assent of the parties to the agreement, clear intent to create binding and enforceable contract, and all essential terms and conditions.

14 January 2022 Internal T.I. 2021-0913891I7 - CERS - Sublease

Unedited CRA Tags
125.7
sublease is generally between sublessor and subtenant, so that landlord consent generally is not required (unless expressly stipulated) for the sublease to take effect
Words and Phrases
sublease
a sublease may in fact constitute a lease assignment

Principal Issues: Whether a document to sublease real property is a written agreement entered into prior to October 9, 2020 when the landlord of the real property did not sign the sublease document before October 9, 2020.

Position: Question of fact.

Reasons: A “written agreement” is not defined in the Act, but under the common law. In general, a written agreement requires mutual assent of the parties to the agreement, clear intent to create a binding and enforceable contract, and all essential terms and conditions. Depending on the circumstances, a sublease that was executed without the required consent of the landlord may still be an effective and binding agreement between the sublessor and the subtenant.