A. Seidel (613)957-8960
Attention: XXXX
November 2, 1988
Dear Sirs:
This is in reply to your letter dated August 8, 1988 related to leasing property and a corporation whose principal business is renting or leasing of leasing property combined with the selling of property of the same general type and description.
"Principal business" is not defined in the Income Tax Act and therefore must be determined based on the facts of each particular case. In paragraph 7 of Interpretation Bulletin IT-371 , some of the factors which may be relevant in determining "principal business" are discussed.
In the situation where the principal business of a corporation is the renting or leasing of leasing property combined with the selling and servicing of property of the same general type and description, it is our opinion that subparagraph 1100(16)(a)(ii) of the Income Tax Regulations (the "Regulations") does not set a limit on the proportion of the total business activity which must be devoted to renting or leasing of leasing property.
In determining the principal business of a corporation the activities referred to in subparagraph 1100(16)(a)(i) and (ii) of the Regulations will normally be viewed conjunctively even though some of such activities may be carried on in separate divisions of the corporation.
While we hope our comments are of assistance to you they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.
Yours truly,
for Director Financial Industries Division Rulings Directorate