In responding to questions as to whether utilities paid by a tenant can qualify as qualifying rent expenses and be claimed under the Canada emergency rent subsidy (“CERS”), CRA indicated:
- If a tenant pays utilities in addition to rent under a lease that is not a net lease, those amounts do not qualify.
- However, amounts that are required to be paid under a net lease by the tenant may so qualify if they are for types of operating expenses that are customarily charged to the tenant under a net lease regarding the property’s operation, for example, where the tenants in a shopping centre pay monthly to the landlord the estimated pro rata portion of the natural gas, electricity and water expenses for the mall.
- Furthermore, “if a net lease requires an amount to be paid to a third party as a regular instalment of operating expenses customarily charged to the tenant under a net lease, this payment may be a qualifying rent expense. Examples of third parties might include property managers or utility service providers.”