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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Lessee - Rent-Free Periods
This is in reply to your letter of May 7, 1993, concerning the tax treatment to a lessee during a rent-free period in a lease.
Where a lease agreement provides for a rent-free period and the lessee is under no legal obligation to pay rent in respect of that period, no outlay or expense is incurred. Accordingly, the lessee would not have any deduction for the purpose of computing taxable income.
In respect of the second part of your question it is not possible to give a general response to your query. A determination of the proper income tax treatment for lease transactions of this type will depend on an analysis of the specific terms of the lease and the facts and circumstances surrounding the particular transaction.
Our foregoing comments are provided pursuant to the practice referred to in paragraph 21 of Information Circular 70-6R2, are not advance rulings and are not binding on the Department in respect of any transaction or taxpayer.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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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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