Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Question
What are Revenue Canada's current assessing practices regarding tenant inducements? Have they changed since the 1987 Revenue Canada Round Table (Q.14)?
Department's Position
The 1987 Round Table question focused on the French Shoes case (French Shoes Ltd. v The Queen (86 DTC 6359), which dealt with an inducement payment received by a tenant on entering into a lease, and the characterization of an inducement payment as being on capital or income account. The question and response dealt with the Department's position on inducement payments received prior to May 23, 1985, the date of enactment of paragraph 12(1)( x). As noted by a Department spokesperson at the 1989 Corporate Management Tax Conference, for periods after May 22, 1985, "Paragraph 12(1)(x) is generally applicable to all inducement payments received by a tenant, subject to the exceptions in subparagraphs 12(1)(x)(v) to (viii)" (p. 8:9). The Department's position has not changed since that time.
Prepared by: J. Stalker Leasing and Financing Section
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