CRA indicates that criteria in IT-206R for distinguishing separate businesses, and in IT-371 for distinguishing a principal business, are applicable under Reg. 1100(12)

CRA declined to comment specifically on whether the principal business of a corporation with a rental operation and also a large but passive endeavour of earning income from share and debt investments in subsidiaries or related companies, was the “leasing, rental, development, or sale, or any combination thereof” for purposes of the exception in Reg. 1100(12) from the rental property restriction rules. It indicated however that the criteria in IT-206R for distinguishing separate businesses, and in IT-371 for distinguishing a principal business, continued to be applicable including in this context.

Neal Armstrong. Summary of 2 November 2023 APFF Roundtable, Q.5 under Reg. 1100(12).