Capital Expenditures (AGI)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-05-11
CLNP Page ID:	2021
Page Categories:	[AGI Applications]
Citation:	Capital Expenditures (AGI), CLNP 2021, <>, retrieved on 2024-05-11
Editor:	MKent
Last Updated:	2022/11/30

Residential Tenancies Act, 2006, S.O. 2006, c. 17

126 (1) A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex in any or all of the following cases:

1. An extraordinary increase in the cost for municipal taxes and charges for the residential complex or any building in which the rental units are located.

2. Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.

3. Operating costs related to security services provided in respect of the residential complex or any building in which the rental units are located by persons not employed by the landlord. 2006, c. 17, s. 126 (1); 2017, c. 13, s. 22 (1).

(2) In this section,

“extraordinary increase” means extraordinary increase as defined by or determined in accordance with the regulations. 2006, c. 17, s. 126 (2).

...

(7) Subject to subsections (8) and (9) and except under the prescribed circumstances, a capital expenditure is an eligible capital expenditure for the purposes of this section if,

(a) it is necessary to protect or restore the physical integrity of the residential complex or part of it;

(b) it is necessary to comply with subsection 20 (1) or clauses 161 (a) to (e);

(c) it is necessary to maintain the provision of a plumbing, heating, mechanical, electrical, ventilation or air conditioning system;

(d) it provides access for persons with disabilities;

(e) it promotes energy or water conservation; or

(f) it maintains or improves the security of the residential complex or part of it. 2006, c. 17, s. 126 (7); 2017, c. 13, s. 22 (3).

(8) A capital expenditure to replace a system or thing is not an eligible capital expenditure for the purposes of this section if the system or thing that was replaced did not require major repair or replacement, unless the replacement of the system or thing promotes,

(a) access for persons with disabilities;

(b) energy or water conservation; or

(c) security of the residential complex or part of it. 2006, c. 17, s. 126 (8).

(9) A capital expenditure is not an eligible capital expenditure with respect to a rental unit for the purposes of this section if a new tenant entered into a new tenancy agreement in respect of the rental unit and the new tenancy agreement took effect after the capital expenditure was completed. 2006, c. 17, s. 126 (9).

O. Reg. 516/06: GENERAL

18. (1) In the Act and in this Part,

“capital expenditure” means an expenditure for an extraordinary or significant renovation, repair, replacement or new addition, the expected benefit of which extends for at least five years including,

(a) an expenditure with respect to a leased asset if the lease qualifies as determined under subsection (2), and

(b) an expenditure that the landlord is required to pay on work undertaken by a municipality, local board or public utility, other than work undertaken because of the landlord’s failure to do it,

but does not include,

(c) routine or ordinary work undertaken on a regular basis or undertaken to maintain a capital asset in its operating state, such as cleaning and janitorial services, elevator servicing, general building maintenance, grounds-keeping and appliance repairs, or

(d) work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex; (“dépense en immobilisations”)

“incurred” means, in relation to a capital expenditure,

(a) the payment in full of the amount of the capital expenditure, other than a holdback withheld under the Construction Lien Act,

(b) if the expenditure relates to a lease, the assumption, when the lease commences, of the obligations under it, or

(c) if the expenditure relates to work undertaken by a municipality, local board or public utility, when the work is completed; (“engager”)

“physical integrity” means the integrity of all parts of a structure, including the foundation, that support loads or that provide a weather envelope and includes, without restricting the generality of the foregoing, the integrity of,

(a) the roof, exterior walls, exterior doors and exterior windows,

(b) elements contiguous with the structure that contribute to the weather envelope of the structure, and

(c) columns, walls and floors that support loads. (“intégrité matérielle”) O. Reg. 516/06, s. 18 (1).

(2) For the purposes of the definition of “capital expenditure” in subsection (1), a lease qualifies if substantially all the risks and benefits associated with the leased asset are passed to the lessee and, when the lease commences, any one or more of the following is satisfied:

1. The lease provides that the ownership of the asset passes to the lessee at or before the end of the term of the lease.

2. The lease provides that the lessee has an option to purchase the asset at the end of the term of the lease at a price that is less than what the market value of the asset will be at that time.

3. The term of the lease is at least 75 per cent of the useful life of the asset, as determined in accordance with section 27 but without regard to any part of section 27 that prevents the useful life from being determined to be less than 10 years.

4. The net present value of the minimum lease payments is at least 90 per cent of the asset’s fair market value at the commencement of the lease where the net present value is determined using the interest rate determined under section 20. O. Reg. 516/06, s. 18 (2).

Homestead Land Holdings Limited v Abdelmalak, 2020 CanLII 117955 (ON LTB)

16. The Landlord's evidence must establish all of the following with respect to each of the capital expenditures:

• The work done meets the definition of "capital expenditure" set out in s. 18(1) of the regulation;
• The capital expenditure is "eligible" pursuant to s. 126 of the Act;
• The work was completed during an 18-month window calculated in accordance with s. 26(2) of the regulation;
• The work has been fully paid for or "incurred" pursuant to s. 18(1) of the regulation; and
• The useful life of the capital expenditure must be identified for each expenditure pursuant to s. 27 of the regulation.