19 February 2003 External T.I. 2003-0181425 - Penalties - Partnership Info Returns

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Description of penalties relating to partnership information returns

Position: N/A

Reasons: The law

XXXXXXXXXX 2003-018142
Gwen Watson
February 19, 2003

Dear XXXXXXXXXX:

Re: Penalties Relating to Partnership Information Returns

This is in reply to your letter of November 20, 2002, wherein you requested clarification of the explanation relating to late-filing penalties on page 10 of the 2002 Guide for the Partnership Information Return, T4068 (the "Guide"), which provides:

Partnership - If you file a Partnership Information Return late, the partnership is liable for each failure to a penalty of $25 per day for each day it is late, from a minimum of $100, to a maximum penalty of $2,500. The partnership has to pay this penalty.

.....

Partners - The partners are also liable to the penalty as discussed in the first paragraph above if they distribute slips late to the recipients.

In particular, you have asked whether the second paragraph should be interpreted to mean that each partner of a partnership could be subject to the maximum penalty of $2,500 per late filed T5013, even though it is, in reality, the partnership that distributes the T5013 slips to the respective partners.

Our Comments

Pursuant to subsection 229(1) of the Income Tax Regulations (the "Regulations"), every member of certain specified partnerships at any time in a fiscal period of the partnership is required to make an information return in prescribed form containing the information listed in paragraphs 229(1)(a) to (f). Subsection 229(5) sets out the dates by which the information return referred to in subsection 229(1) must be filed with the Minister.

In addition, section 209 of the Regulations provides that every person who is required by section 229 to make an information return is required to forward two copies of the applicable portion of the partnership information return to each taxpayer to whom the return relates, on or before the date the return is required to be filed with the Minister. Since the members of the partnership are required by section 229 of the Regulations to make a partnership information return, section 209 imposes the distribution obligation on the members of the partnership, and not the partnership itself.

Accordingly, in the event that the members of the partnership fail to comply with section 209 of the Regulations, each member of the partnership will be liable to a penalty under paragraph 162(7)(b) of the Income Tax Act (the "Act") for failing to comply with a duty or obligation imposed by the Act or the Regulations. This position is set out in paragraph 20 of Information Circular 89-5R Partnership Information Return, dated June 21, 1991, as amended.

We note that in the event that the partnership information return is not filed with the Minister within the time set out in subsection 229(5) of the Regulations, the partnership, as opposed to the partners, will be liable for a penalty by virtue of subsection 162(7.1) of the Act.

We trust the foregoing will be of assistance. These comments are provided in accordance with the practice outlined in paragraph 22 of Information Circular 70-6R5, and are not binding on the CCRA.

Yours truly,

Mark Symes
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
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