31 October 1989 Income Tax Severed Letter AC58365 - Principal Residence — Meaning of "Ordinarily Inhabited"

S. Short
         (613) 957-2134

         19(1)

         October 31, 1989

         Dear Sirs:

         Re: Meaning of "ordinarily inhabited" as used in
             Paragraph 54(g) of the Income Tax Act (the "Act")

         This is in reply to your letter dated July 12, 1989
         (File No. 40053/340) wherein you have asked whether a
         taxpayer could be considered to have "ordinarily
         inhabited" a particular housing unit, within the
         meaning of that expression found in paragraph 54(g) of
         the Act, in any of the years from 1972 to the present
         in the particular circumstances set forth in your
         correspondence.

         Whether a taxpayer has "ordinarily inhabited" a
         residence is a finding of fact based on all facts
         and circumstances surrounding each case.  Such a
         determination can best be made by your local district
         taxation office (located at 36 Adelaide Street East,
         Toronto).  We do not feel that we are in a position to
         offer you a definitive response.  However, we do offer
         the following general comments which may be of
         assistance to you.

         The expression "ordinarily inhabited" is not defined in
         the Act.  As discussed in paragraph 9 of interpretation
         bulletin  IT-120R3
, where a residence has been occupied
         by such a person for only a short period of time during
         a taxation year (such as a seasonal residence), it is
         the Department's view that the taxpayer "ordinarily
         inhabited" that residence in the year provided that the
         principal reason for owning the property was not for
         the purpose of gaining or producing income therefrom.

         The Shorter Oxford English Dictionary defines "inhabit"
         to dwell in, occupy as an abode.  The New Webster
         Encyclopedia Dictionary of the English language also
         defines "inhabit": to live or dwell in; to occupy as a
         place of settled residence.  The word inhabitant is
         defined as: one who inhabits; one who dwells or resides
         permanently in a place, as distinguished from an
         occasional visitor.

         The facts particular to your case would appear to
         indicate that the taxpayer "ordinarily resided" in the
         residence in some of the years in question, particularly
         in the latter years (1977 and onward) when he
         transferred his ordinary or everyday possessions into
         the residence for his use. 
         Subparagraph 54(g) of the Act requires a residence to be
         ordinarily inhabited "in the year".  Thus, a
         determination must be made on a year to year basis in
         deciding whether a residence was ordinarily inhabited
         in the year.  Circumstances may also support the
         position that the residence was "ordinarily inhabited"
         in the earlier years (1972 - 1976) but as we are not
         cognizant of all the relevant facts particular to your
         case, we are unable to offer an opinion on a year to
         year basis.

         We regret that we cannot be of more assistance to you.

         Yours truly,

         P.D. Fuoco
         for Director
         Business and General Division
         Specialty Rulings Directorate
         Legislative and Intergovernmental
            Affairs Branch