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Specified Investment Business (SIB)
Income Tax Act s. 125(7), 129(6)
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.
In 2016 Canada Revenue Agency issued interpretation bulletin 2016-0647271E5 regarding campgrounds and the small business deduction, indicating that a corporation operating a campground would probably be considered to be earning property income, and would be considered a specified investment business unless it met the 5 full-time employees condition.
A 2019 Tax Court decision, 1717398 Ontario Inc. (Lost Forest Park) v. The Queen, 2019 TCC 183, dismissed the appeal of a corporation operating a campground.
Related ArticlesCorporate Income Tax Rates
Canada Revenue Agency (CRA) Resources:
T4012 Corporate Income Tax Guide Chapter 4 - scroll down to Specified Investment Business
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Revised: April 27, 2021
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