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.
MEMO TO FILE:
CTF November, 1992
Question 31
Lease Inducements - Treatment By Tenant
As an inducement for signing long-term leases, lessees will often receive a reduction of rent payable or even the waiver of rent for a number of months. In early 1990, the Department commented that a reduction of rent or a rent-free period for non-anchor tenants is considered to be on income account and should be amortized by lessors over the duration of the first term of the applicable lease, in accordance with their adopted accounting practices.
What is the Department's current position with respect to the appropriate treatment to be adopted by tenants? Does it matter whether the tenant is an anchor tenant or not an anchor tenant?
Department's Position
The Department is presently reviewing its position for both the lessor and the lessee with regards to rent reductions and rent-free periods. Also, IT-359R2 is under revision.
We expect to be able to clarify our position in the near future.
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