In short
Canadian commercial rents are usually quoted per square foot per year. Most leases are net leases: on top of the base rent you pay "additional rent", often called TMI (taxes, maintenance and insurance), estimated in advance and reconciled after the year. GST or HST applies to commercial rent, including the additional rent.
1. Work out the full cost
- Base rent per sq ft per year, plus additional rent (TMI) per sq ft per year: add them to compare spaces. Our commercial rent calculator does this.
- GST/HST on the whole amount, including TMI (for example 13% HST in Ontario).
- Utilities, the deposit, and the cost of your fit-out.
2. Understand TMI and its reconciliation
TMI is estimated by the landlord for the year and adjusted once the real costs are known, so you may owe more. Ask for a breakdown of what TMI includes, last year's actual figures, and whether the lease lets you audit the landlord's statements.
3. Check zoning and permits
Confirm with the municipality that the zoning allows your business, and what permits or licences your use needs before you open.
4. Offer to lease, then the lease
- Most deals start with an offer to lease setting out the rent, TMI, term, renewal options, free-rent period, tenant improvement allowance and deposit.
- Check the use clause, repairs, assignment and subletting, and any personal guarantee.
- Have a lawyer review both documents before you sign.
Checklist
- Base rent plus TMI worked out per year and per month
- GST/HST included in the budget
- TMI breakdown and audit rights checked
- Zoning and permits confirmed
- Offer to lease and lease reviewed by a lawyer
Questions people ask
What is TMI in a Canadian commercial lease?
Taxes, maintenance and insurance: the tenant's share of the property's operating costs, paid as additional rent on top of the base rent in a net lease, and reconciled after each year.
Is GST or HST charged on commercial rent in Canada?
Yes. Unlike residential rent, commercial rent is subject to GST/HST, on the base rent and the additional rent.
How is commercial rent quoted in Canada?
Usually as a rate per square foot per year for the base rent, with TMI quoted separately per square foot per year.
Sources
- GST/HST on commercial real property: Canada Revenue Agency
- Net leases, TMI and HST on commercial rent: Renting a commercial property in Ontario (Mondaq)
Next steps
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