Rental and leasing income are normally considered income from property. However, this income may, What rental activities are not treated as passive income, how can a real estate professional satisfy the tests so that rental income can be treated as active income, and what other characteristics distinguish active rental income from passive rental income. The Small Business Deduction (SBD) is available to Canadian Control Private Corporations (CCPC) on Active Business Income (ABI). Active Business includes any business carried on by a corporation other than a Specified Investment Business or a Personal Services Business. Can rental income be claimed as Active Business Income (ABI)?. In most cases, income from the property will be considered as passive income and would not qualify for a small business deduction.
For example, rental income is considered a passive income (income from property) unless the company has The Canada Revenue Agency denied the deductions on the basis that the “ principal purpose” of the corporation's business was to earn rental income and that Under the Income Tax Act, a corporation is eligible to claim the small business deduction if it was a CCPC which carries on an “active business. If you derive property income from an associated corporation and that corporation deducted the amounts from active income, then the income is active business income to you. A common example is a holding corporation that rents out a building, or equipment, to an operating subsidiary. Active income is typically anything other than investment income, rental income, leasing income, income from a specified investment business or a personal services Income does not qualify for the small business deduction. Rental and leasing income may qualify as active income in certain situations.