2021-0875571I7 CERS - Boat Slips as Immovable Property

Principal Issues: Is a boat slip in a marina real or immovable property such that rental expenses for the boat slip qualify for the CERS?

Position: Question of fact.

Reasons: Whether the boat slip is real or immovable property is a factual inquiry and depends on whether the boat slip can be considered to be a fixture or structure.

Author: Koh, Kah Foo
Section: 125.7

David Gagné-Therrien
Dedicated Telephone Service, Section I                                                              2021-087557
Canada Revenue Agency                                                                                    Kah Foo, Koh

May 3, 2021

Dear Mr. Gagné-Therrien:

Re:  Boat Slip as Qualifying Property

We are writing in response to your question regarding whether a boat slip can be considered real or immovable property, such that a boat slip is capable of being “qualifying property”, as defined in subsection 125.7(1) of the Income Tax Act (the “Act”), for purposes of the Canada Emergency Rent Subsidy (“CERS”) provided in section 125.7 of the Act.

Our Comments

The CERS is based on a qualifying eligible entity’s “qualifying rent expense” in respect of a qualifying property for a “qualifying period” as those terms are defined in subsection 125.7(1) of the Act. For a property, such as a boat slip, to qualify for the CERS, among other things, it must be a “qualifying property” of an eligible entity, which is defined in subsection 125.7(1) of the Act to mean real or immovable property in Canada used by the eligible entity in the course of its ordinary activities, subject to certain specific exclusions with respect to “self-contained domestic establishments”.

The term “real or immovable property” is not defined in the Act for purposes of the CERS.  Thus, in determining whether a boat slip is real or immovable property, it would be necessary to refer to the definition of “immovable property” under the Civil Code of Quebec (S.Q. 1991, c. 64) (“CCQ”) if the property was located in Quebec, or consider common law principles for property located in provinces other than Quebec.  In general, such a determination under either common law principles or the CCQ remains a question of fact that would require consideration of various factors, including the degree or permanence of the annexation to the land or ground (i.e., whether it has become a fixture or structure), the purpose of the annexation, and the nature of the property.

Therefore, while it may be possible for a boat slip to be considered real or immovable property such that it is capable of being qualifying property for purposes of the CERS, whether a particular property, such as a boat slip is a real or immovable property is a question of fact, which requires a detailed examination of the specific facts and circumstances.

We trust our comments will be of assistance.

Yours truly,

Amanda Couvrette CPA, CA
Acting Manager
Business Income and Capital Transactions
Income Tax Rulings Directorate

UNCLASSIFIED

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