Aco will receive a grant (the “Government Assistance”), described under s. 12(1)(x)(iv), from a Crown corporation for the purpose of creating or repairing affordable housing. CRA stated:
To the extent that the proceeds of the Government Assistance are used to fund an outlay or expense that is otherwise fully deductible in the year under a provision of the Act (e.g. landscaping under paragraph 20(1)(aa), investigation costs under paragraph 20(1)(dd), disability related modifications to buildings in accordance with paragraph 20(1)(qq), salary and certain repairs and maintenance under subsection 9(1)), Aco may elect under subsection 12(2.2) to reduce the outlay or expense by the amount of the related assistance. …
To the extent that an election is made under subsection 12(2.2), the inclusion under paragraph 12(1)(x) will be reduced pursuant to subparagraph 12(1)(x)(vii). As an alternative, Aco may choose to take the deduction in respect of the outlay or expense in the normal course, and have an inclusion under paragraph 12(1)(x); the net result will be the same.