Principal Issues: Can a shared residence be a self-contained domestic establishment?
Position: Question of fact but it might be possible.
Reasons: All facts and circumstances need to be considered.
XXXXXXXXXX 2010-036750 Michael Cooke, C.A. September 9, 2010
Dear XXXXXXXXXX :
Re: Meaning of "Self-Contained Domestic Establishment"
This is in response to your letter of May 12, 2010, wherein you asked whether an individual who rents a house could be considered to be maintaining a "self-contained domestic establishment" ("SCDE") as that term is defined in subsection 248(1) of the Income Tax Act (the "Act") where the individual shares the house with his or her landlord.
Our Comments:
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.
A SCDE is defined in subsection 248(1) of the Act to mean "a dwelling-house, apartment or other similar place of residence in which a person as a general rule sleeps or eats". As indicated in paragraph 7 of Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, the CRA generally considers a residence to be a SCDE for the purposes of subsection 6(6) of the Act if it is a living unit with restricted access that contains a kitchen, bathroom, and sleeping facilities. It is also noted that a SCDE would not ordinarily include a bunkhouse, dormitory, hotel room, or a room in a boarding house.
While a question of fact, it is possible that shared rental accommodations, such as an apartment or a house, could reasonably be considered as a SCDE of an individual for the purposes of a particular provision of the Act, even though certain common facilities, such as a kitchen or bathroom, may otherwise be shared with another person. However, the CRA would need to consider all relevant facts and circumstances of the particular situation, including the provision of the Act being applied, before making any determination as to whether the residence would be an individual's SCDE for that purpose.
We trust the above general comments will be of assistance.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch