Words and Phrases - "activity"

A pension corporation that is exempted under s. 149(1)(o.2)(ii) (the “Corporation”) owns a 45% interest in a limited partnership (the “Limited Partnership”) that will develop residential apartment property (the “Residence”) which will have furnished suites units (including furniture (the “Furniture”) with a relatively small cost) that are leased to university students. The Limited Partnership’s level of activity directed towards the rental of the apartment units will not rise to the level of carrying on an active business. In this context, would the Corporation be considered to have limited its activities as required by s. 149(1)(o.2)(ii)(A). CRA responded:

We have assumed that the Furniture in this case is ordinarily and customarily found in rental apartment units for students.

In such case … the Limited Partnership’s proposed acquisition and ownership of the Furniture for the purpose of furnishing the rental units in the Residence would not be a distinct activity that is separate from its activity of leasing real property. Thus, the proposed ownership of the Furniture by the Limited Partnership would not, in and of itself, result in the failure of the Corporation to satisfy the activity restriction in clause 149(1)(o.2)(ii)(A).