Rules re Capital Expenditures
22. The following are prescribed as rules for making findings relating to capital expenditures: 1. A rent increase shall not be ordered in respect of a capital expenditure unless the work was completed during the 18-month period ending 90 days before the effective date of the first intended rent increase referred to in the application. 2. Despite paragraph 1, a rent increase may be ordered in respect of a capital expenditure completed prior to the 18-month period referred to in that paragraph if, i. the work was completed on or after June 25, 1996, and ii. the capital expenditure is the subject of an application made within six months of the day that section 138 of the Act comes into force. 3. The value of the landlord’s own labour in carrying out the work involved in the capital expenditure is equal to the amount of time spent multiplied by a rate of pay that is reasonable given the landlord’s experience and skill in the type of work done. If the amount of time spent exceeds the amount of time that would be reasonable given the landlord’s experience and skill, the latter amount of time shall be used in the calculation of the value of the landlord’s own labour. Only that part of the value of the landlord’s own labour that does not exceed the amount a person in the business of doing such work would charge shall be considered. The value of the landlord’s own labour does not include any amount with respect to the management and administration of the work involved in the capital expenditure. 4. The cost of a leased asset is the fair market value of the leased asset at the commencement of the lease. 5. Subject to paragraph 6, the amount of a capital expenditure is calculated as follows: i. Add the total of the purchase prices, the cost of any leased assets and the installation, renovation and construction costs, other than the value of the landlord’s own labour as determined under paragraph 3. ii. Multiply that sum by 1.05 as an allowance for management and administration. iii. Add to the amount determined under subparagraph ii the value of the landlord’s own labour, as determined under paragraph 3. iv. Subtract from the amount determined under subparagraph iii any grant or other assistance from any level of government and any insurance, salvage, resale or trade-in proceeds related to the work undertaken or the item purchased. v. Multiply the amount determined under subparagraph iv by the factor determined under subsection 17 (2). 6. The amount of a capital expenditure for furniture or appliances is calculated as follows: i. Add the total of the purchase prices, the cost of any leased assets and the installation, renovation and construction costs. ii. Add to that sum the value of the landlord’s own labour, as determined under paragraph 3. iii. Subtract from the amount determined under subparagraph ii any grant or other assistance from any level of government and any insurance, salvage, resale or trade-in proceeds related to the work undertaken or the item purchased. iv. Multiply the amount determined under subparagraph iii by the factor determined under subsection 17 (2). 7. The allowance for each capital expenditure is the amount of the capital expenditure amortized over the useful life of the work done or the thing purchased, as determined in accordance with section 23, in equal instalments of blended principal and interest. 8. The amortization under paragraph 7 shall be calculated using the interest rate determined under subsection 17 (1). O. Reg. 194/98, s. 22.