An eligible entity signed a pre-construction lease for new office space several years ago and then moved into this location. It attempted to sublease its previous space but was unsuccessful due to the COVID-19 pandemic. Is such unoccupied office space a qualifying property for a qualifying period for purposes of the Canada Emergency Rent Subsidy (“CERS”)?
CRA first noted that
- the definition of a qualifying property generally required the real property to be used by the eligible entity in the course of its ordinary activities.
- Ensite found that property was used in a business if it was employed and risked in the business such that the withdrawal of the property would have a decidedly destabilizing effect on the corporate operations.
- Glaxo Wellcome found that the word “use” connotes actual utilization for some purpose, not holding for future use.
CRA then stated:
[R]egard must be given to the actual use to which the property is put in the course of the eligible entity’s ordinary activities. Generally, property lying idle or not used for any purpose would not be property that is used in the course of the ordinary activities of an eligible entity. ...
[G]iven that the office space was unoccupied since the eligible entity moved to a new office … the old office space would likely not be considered to be used in the ordinary activities of the eligible entity. This is because it does not appear to be employed and risked in the ordinary activities of the eligible entity, and is merely waiting to be subleased.