The appellant taxpayer, a commercial real estate developer, made tenant inducement payments (TIPs) to secure tenants for a new building.
The taxpayer deducted the entire cost of the TIPs from its business income in the year the payments were made.
The Minister reassessed the taxpayer, arguing the payments should be amortized over the life of the leases.
The Supreme Court of Canada held that the taxpayer's method of computation was consistent with the Income Tax Act and well-accepted business principles.
Because the primary purpose of the TIPs was realized entirely in the year they were made, the taxpayer was entitled to deduct the payments entirely in that year.
