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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
PRINCIPAL ISSUES:
Apportionment of expenses when residence is shared by a tenant
POSITION:
Enclosed a copy of the publication "1995 Rental Income".
REASONS:
The apportionment comments are contained on page 7 captioned, "Renting part of your property".
963288 XXXXXXXXXX A.M. Brake
October 10, 1996
Dear XXXXXXXXXX
This is in reply to your letter of October 1, 1996, wherein you requested information with regard to apportioning expenses in a situation where a tenant shares the same apartment in which the owner resides.
Rather than comment specifically on the scenario outlined in your letter, we are forwarding a copy of Interpretation Bulletin IT-120R4 on Principal Residences together with a copy of our Departmental publication entitled "1995 Rental Income". In this regard, we refer you to page 7 of the publication, captioned "Renting part of your property". Also, we are providing the following general comments.
OUR COMMENTS
The Income Tax Act (the "Act") specifically prohibits the deduction of any outlay or expense to the extent that it was not laid out to earn income from a business or property and requires that the expenses must be reasonable in the circumstances.
The Act denies any deduction in respect of "personal and living expenses" which are defined to include "the expenses of properties maintained by any person for the use or benefit of the taxpayer or any person connected with the taxpayer by blood relationship, marriage or adoption, and not maintained in connection with a business carried on for profit or with a reasonable expectation of profit."
We trust our comments will be of assistance to you.
Yours truly,
R. Albert for Director Business and Publications Division Income Tax Rulings and Interpretations Directorate Policy and Legislation Branch
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