Definitely, yes. As per the Income Tax Act this is considered taxable income, and should be reported on your personal tax return each year. In an audit, should the Canada Revenue Agency (“CRA”) request to see your personal bank statements, the monthly rent deposits will raise a red flag, if the rental income is not reported on your personal tax return.
If you fail to report rental income earned, the CRA can impose penalties (up to 50% of the unreported income), plus interest. You should consult with your accountant on the potential expenses you can deduct against this basement rental income to minimize your tax liability.
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