Words and Phrases - "written agreement"
19 April 2001 Internal T.I. 2001-0069067 F - PENSION ALIMENTAIRE ACCORD ECRIT
In finding that the submitted documents did not constitute a “written agreement,” the Directorate stated:
[N]one of the documents submitted constitutes a contract under which the parties have agreed on the scope of the services that one of the parties is required to perform and which confers on the contractual creditor the right to demand full performance.
20 January 2022 Internal T.I. 2021-0877511I7 - CERS- Written Agreement
On June 25, 2020, the taxpayer (“TP”) entered into a binding offer (the letter of understanding, or “LOU”) to lease real property from a person (the Landlord) with whom it dealt at arm’s length. The signed LOU was definitive on lease terms (i.e., length, costs, use, etc.) with no option for either party to terminate or opt out of the agreement prior to executing the formal lease and a non-refundable amount was paid on signing. TP occupied the space as of November 1, 2020, but the formal lease document was not fully executed until November 19, 2020 (the “Lease”).
CRA stated, regarding the requirement that there have been a written agreement entered into before October 9. 2020:
[W]hile there is no requirement that the documents be signed … the written documents must show a clear intention to create a binding and enforceable contractual relation, outline all the essential terms and conditions of the agreement, and demonstrate an acceptance in writing by both parties of the terms and conditions.
…[B]ased on the facts as presented, it appears that the LOU has the requisite characteristics to be a written agreement.
Turning to whether the rents were paid “under” the June 25, 2020 written agreement, CRA stated:
In the absence of any explicit language in the LOU and the Lease to the contrary, it is possible for the Lease to be a continuation or extension of the LOU, assuming that the Lease includes the same enforceable and binding rights and obligations, and terms and conditions, as the LOU.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | agreement to lease entered into before cut-off date complied if it contained the essential binding terms | 170 |