{"id":1301,"date":"2014-10-27T15:33:04","date_gmt":"2014-10-27T15:33:04","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=1301"},"modified":"2014-10-27T15:33:04","modified_gmt":"2014-10-27T15:33:04","slug":"tcc-finds-principal-purpose-of-business-was-to-derive-rental-income","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2014\/10\/tcc-finds-principal-purpose-of-business-was-to-derive-rental-income\/","title":{"rendered":"TCC finds principal purpose of business was to derive rental income"},"content":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2014\/10\/2014-TCC-301.pdf\"><em>0742443 B.C. Ltd. v. The Queen<\/em><\/a>, 2014 TCC 301, the company provided storage units along with other services.\u00a0 The company argued that its net revenue from all activities constituted active business income for purposes of the small business tax regime in s. 125.\u00a0 The Tax Court disagreed.\u00a0 Here are some brief observations.<\/p>\n<ol>\n<li>There was no question company carried on a <em>business<\/em>.<em>\u00a0 <\/em>The company was not merely a passive person simply drawing income from property.\u00a0 Rather, the company was engaged in at least some activity connected with earning rental revenue.\u00a0 Accordingly, the company was earning income <em>from<\/em> business, not income <em>from<\/em> property \u2013 as a general principle.<\/li>\n<li>However, carrying on a <em>business<\/em> (alone) is not sufficient to gain access to the preferential tax rate in s. 125 (paragraph 14).\u00a0 Excluded from this preferential rate is a business <em>the principal purpose<\/em> of which is to derive income from property (paragraph 14).\u00a0 This statutory test looks to the nature of the revenues earned in the business (paragraph 15).<\/li>\n<li>On the facts, the principal purpose of the company\u2019s business was to derive rental revenues from its storage units.\u00a0 In some cases, there may come a tipping point where the provision of services overcomes the provision of property (paragraph 29).\u00a0 This tipping point was not reached on the facts here.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2014\/10\/2014-TCC-301.pdf\"><em>0742443 B.C. Ltd. v. The Queen<\/em><\/a>, 2014 TCC 301, the company provided storage units along with other services.\u00a0 The company argued that its net revenue from all activities constituted active business income for purposes of the small business&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1301","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=1301"}],"version-history":[{"count":0,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1301\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=1301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=1301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=1301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}