A thank you to Neal Armstrong for the word that a new CRA Technical Interpretation has been issued on payments to rental tenants for relocation compensation that were ordered by a municipality as part of authorizing a redevelopment (to compensate them for higher rental costs while they moved). CRA considered the payments and concluded that they did not fit any definition of income, or any deeming rule including them in income, under the Income Tax Act.
Therefore a compensation payment to a residential tenant to compensate for higher rental costs (and presumably at least some other kinds of cost-compensation payments to tenants as well) during a period of non-occupancy is a non-taxable windfall.
