Calculation of lawful rent
 12. (1) The rules set out in this section apply in calculating lawful rent under subsection 111 (3) of the Act.  O. Reg. 516/06, s. 12 (1). (2) The lawful rent for any rental period in the 12-month period shall be calculated in the following manner: 1.  Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the largest eligible discount determined under subsection (6). 2.  Divide the amount determined under paragraph 1 by the number of rental periods in the 12-month period. 3.  Add to the amount determined under paragraph 2 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act.  O. Reg. 516/06, s. 12 (2). (3) Despite subsection (2), if a landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, the lawful rent shall be calculated by dividing the discounted rent by 0.98.  O. Reg. 516/06, s. 12 (3); O. Reg. 377/11, s. 3 (1). (4) Despite subsections (2) and (3), if the landlord provides a discount in rent described in subsection 111 (2) of the Act and another discount, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner: 1.  Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the sum of the discounts described in subsection 111 (2) of the Act actually provided or to be provided to the tenant during the 12-month period. 2.  Add the amount determined under paragraph 1 to the largest eligible discount determined under subsection (6). 3.  Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period. 4.  Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act.  O. Reg. 516/06, s. 12 (4); O. Reg. 256/10, s. 3 (1, 2). (5) Despite subsections (2) and (3), if the landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, and the landlord also provides another discount in rent, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner: 1.  Divide the discounted rent by 0.98. 2.  Multiply the amount determined under paragraph 1 by the number of rental periods in the 12-month period and add the result to the largest eligible discount determined under subsection (6). 3.  Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period. 4.  Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act.  O. Reg. 516/06, s. 12 (5); O. Reg. 256/10, s. 3 (3). (6) For the purpose of this section, the largest eligible discount shall be determined in accordance with the following rules: 1.  In the case of a discount that is provided for in a written agreement, the largest eligible discount is the largest of the following amounts: i.  The lesser of the following amounts: A.  The sum of the discounts in rent during the first eight months of the 12-month period. B.  The rent for one month. ii.  The largest discount in rent during any month in the last five months of the 12-month period, plus the lesser of the following amounts: A.  The sum of the discounts in rent during the first seven months of the 12-month period. B.  The rent for one month. iii.  The largest discount in rent during any month in the 12-month period, if, A.  the rent is paid monthly, and B.  the largest discount in rent during any month in the 12-month period is equal to the rent for less than one month. iv.  The sum of the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period, if, A.  the rent is paid monthly, B.  the largest discount in rent during any month in the 12-month period is equal to the rent for one month, and C.  the second-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month. v.  The sum of the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period, if, A.  the rent is paid monthly, B.  the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period are both equal to the rent for one month, and C.  the third-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month. vi.  The rent for three months, if, A.  the rent is paid monthly, and B.  the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period are all equal to the rent for one month. vii.  The lesser of the following amounts, if the rent is paid daily or weekly: A.  The sum of the discounts in rent provided in the form of rent-free weeks during the 12-month period. B.  The rent for 13 weeks. 2.  In the case of a discount that is not provided for in a written agreement, the largest eligible discount is the largest discount in rent in one rental period in the 12-month period.  O. Reg. 516/06, s. 12 (6); O. Reg. 377/11, s. 3 (2). (7) Despite subsection (2), if a tenancy agreement operates under the Strong Communities Housing Allowance Program — Toronto Pilot, and the landlord does not comply with paragraph 3 of subsection 11 (1), the lawful rent shall be the undiscounted rent that was permitted under the Act at the time when the tenancy agreement began to operate under the Program.  O. Reg. 516/06, s. 12 (7). (8) In this section, “the 12-month period” has the same meaning as in section 11.  O. Reg. 516/06, s. 12 (8).