Corporation A erected, at its expense and for exclusive use in its transport business, a detached garage on the land on which the principal residence of its individual shareholder (the “Taxpayer”) is located. The land subjacent to the garage is leased to it by the Taxpayer. In indicating that the leased land would not be part of the Taxpayer’s principal residence, CRA stated:
[I]t would be unreasonable to consider the land subjacent to the garage as contributing to the use of the housing unit as the principal residence of the Taxpayer, from the time the garage is used exclusively for the purposes of the business of Corporation A.
CRA went on to note that as a result of a deemed disposition under s. 45(1)(c) effective the commencement of the business use, there would on that basis as well be an exclusion of such land from the Taxpayer’s principal residence.