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.
January 20, 1993
Audit Technical SupportRulings Directorate DivisionC. Tremblay 957-2744
Attention: Wayne Adams
930123
Real Estate - Rent Free Periods
This is further to our memorandum of November 18, 1992, and to advise you of the Department's position on the tax treatment of both the landlord and the tenant during a rent-free period in a lease.
Where a rental agreement provides for a rent-free period and there is no legal obligation on the part of the tenant to pay rent in respect of that period, there is no income to be recognized by the landlord.
In the case of a tenant, where the lease agreement indicates that the tenant has a "rent-free" period, no rent is payable and no liability is incurred. Any imputed rent expense during the rent-free period would therefore be disallowed pursuant to paragraph 18(1)(a) of the Act.
for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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