A condominium corporation (the "Corporation") enters into a leasing agreement with a solar company, which would lease several roofs within the complex for the use of solar panels, with the output sold to the public electrical grid. The solar company would assume all costs of the arrangement, and the Corporation would receive annual income of approximately $XX or a percentage of the revenues generated, which would be contributed to the Corporation's reserve fund thus potentially offsetting or freezing any annual reserve fund increase, and/or reducing annual reserve fund contributions and/or reducing property owner's monthly maintenance fees. Would this jeopardize its s. 149(1)(l) exemption? CRA stated:
[I]ncidental income from the rental of common areas may be treated as income of the Corporation and generally will not affect [its] tax-exempt status… . Incidental, in this context, means both minor and directly related to activities undertaken to meet the Corporation's not-for-profit objectives of managing and maintaining the condominium property and required reserves. …
Income that is not incidental will usually be considered to be income of the unit owners, if this is appropriate under the relevant provincial law. Subsection 11(2) of the Condominium Act of Ontario (S.O. 1998, c.19) provides that "the owners are tenants in common of the common elements…". …
Where the relevant provincial law indicates that the income is the income of the Corporation, then we would agree that the Corporation may not be tax-exempt pursuant to paragraph 149(1)(l)… .