Principal Issues: Can the following amounts received by the Partnership be excluded from “gross REIT revenue” as defined in subsection 122.1(1) of the Act? (1) Loans payable and equity contributions; (2) ITCs; (3) Rebates (such as volume discounts from suppliers and the HST Rebate)
Position: (1) Yes; (2) Yes, subject to caveat described below; (3) Yes, subject to caveat described below.
Reasons: (1) Loans and equity contributions would also not be considered revenue for purposes of the “gross REIT revenue” definition because these amounts could not be considered “revenue” within the ordinary meaning of the term nor under well-accepted principles of business and accounting practice. (2) and (3) ITCs, HST Rebates and volume rebates and discounts would not be considered “revenue” within the ordinary meaning of the term nor under the well-accepted business and accounting practices. For accounting purposes, such amounts would normally reduce the amount of the expense or the capital cost or adjusted cost base of the related property acquired. As a result, under the definition of “gross REIT revenue”, such amounts would indirectly be included in “gross REIT revenue” when the property is disposed of. In determining whether an entity meets the Gross REIT Revenue Tests, the entity must apply the above exclusions on a consistent basis to all sources of revenue.
