Before concluding that “the operator of a bed and breakfast, who has a personal residence in which bed and breakfast rooms are rented out on a short-term basis, is generally considered to be carrying on a business” rather than having a source of property income, so that the limitation in s. 18(12) (whose operation was discussed in general terms) could be applied, CRA stated:
A taxpayer generally earns income from property if the taxpayer does no more than rent space and provides essential services. These essential services may include, but are not limited to, heating, lighting, parking, maintenance of furnishings provided in the rented premises, and laundry room services.
However, if a taxpayer provides additional services such as meal services, a continued supply of clean sheets, and supplies of bathroom items, the taxpayer's rental operation may be considered to be a business. The nature and number of services provided will determine whether a rental operation qualifies as a business.