A CCPC (ABC Inc.) owns a building, 65% of which is used in its manufacturing business, and the remaining 35% is leased to a third party. CRA referenced (subpara. (b)(ii)) of the definition of “income” in s. 129(4), which assimilates to income from an active business, property income from property used or held principally for the purpose of gaining or producing income from that business., and stated:
[T]here are arguments to support the contention that the building used 65% by ABC Inc. in its manufacturing activities could be a property used or held primarily to earn income from its manufacturing business for the purposes of subparagraph (b)(ii) … . In such case, the rental income of ABC Inc. would qualify as "income of the corporation for the year from an active business" within the meaning of subsection 125(7).