A specified investment business is a corporation whose principal purpose is to derive income (interest, rent, dividends and royalties) from property, unless the business employs more than 5 full-time employees throughout the taxation year. Income from property would include rental or leasing income from land or buildings, but would exclude income from renting or leasing moveable property such as machinery and equipment.
A specified investment business is not eligible for the small business deduction, and the income is taxed in the corporation in the same way that investment income is taxed. There is an exception to this when the investment income is received from an associated corporation earning active business income. An example would be a holding company leasing property to an associated corporation earning active business income.
See Campgrounds and the Small Business Deduction.
Corporate Taxation of Investment Income
Rental Income - Business Income or Property Income?
T4012 Corporate Income Tax Guide Chapter 4 - scroll down to Specified Investment Business
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