A dentist lives on the first floor of his residence but uses the basement solely for his practice. Some common expenses which were incurred for both personal and business purposes were disallowed as to 60%, i.e., according to the proportion of personal use, pursuant to ss. 18(1)(a) and (h). Does s. 18(12) permit the disallowance of the 40% proportion of the common expenses otherwise deductible as those expenses are not wholly attributable to the part of the home that is used for business? The Directorate responded:
You cannot use this subsection to disallow the business portion of the common expenses on the basis that those costs cannot be traced solely to the portion of a self-contained domestic establishment referred to in paragraph 18(12)(a). The allocation of common expenses, i.e., establishing the personal versus business portion, has already been determined pursuant to paragraphs 18(1)(a) and (h). The application of subsection 18(12) does not alter this initial allocation.