On March 18, 2021 - The CERS website was updated to address situations in which an Operating corporation (Opco), was paying rent to a non-arm’s length corporation (Holdco). It noted:
Hold Co’s rent subsidy is calculated based on its own eligible expenses and not the commercial rent paid or payable by its non-arm’s length tenant(s).
If Hold Co has not experienced a drop in revenue based on its own qualifying revenue, it may still qualify by making use of one of the elective special rules for calculating eligible revenue.
These comments are consistent with what VTN postulated in previous Monthly Tax Update issues.
Also, a Technical Interpretation was released discussing eligibility of ancillary expenses to rent in net lease arrangements.