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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: whether person who transfers property to a partnership of which the person is a 50/50 partner with his/her spouse or son deals at arm's length with the partnership
Position: not dealing at arm's length
Reasons: all are related
August 10, 1998
Michael Luzny Resource Industries Section
Workload Development Denise Dalphy
Winnipeg TSO
981725
Meaning of Non-Arm’s Length and subsection 14(3) of the Income Tax Act (the “Act”)
This is in reply to your FAX of July 2, 1998 wherein you requested the Department’s views on the meaning of the term “non-arm’s length” where eligible capital property is sold by an individual to a partnership, the members of which are the individual and his spouse (or the individual and his son), who each have a 50% interest in the partnership.
Since all parties to the transaction are related, it is our view that the partnership would be considered to have acquired the property from a person with whom it was not dealing at arm’s length.
for Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Division
Policy and Legislation Branch
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