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.
Principal Issues: CRA's administrative policy on how the proposed amendments to subsection 99(1) will be applied.
Position: While awaiting Royal Assent, in situations where there is the possibility of double taxation, the CRA is prepared, in the context of a ruling request, to apply the law in a manner such that a taxpayer is not taxed twice on the same amount.
Reasons: Similar to position outlined in Technical News No. 9
XXXXXXXXXX
2010-035611
C. Tzortzis
June 30, 2010
Dear XXXXXXXXXX :
Re: Subsection 99(1)
This is in response to your letter dated February 2, 2010 inquiring about how the proposed amendments to subsection 99(1) of the Income Tax Act will be applied by the Canada Revenue Agency ("CRA").
It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the CRA Web site at
www.cra-arc.gc.ca. We are, however, prepared to provide the following general comments, which may be of assistance.
The technical notes to the proposed amendments to subsection 99(1) state that subsection 99(1) provides that, generally, a fiscal period of a partnership is considered to end immediately before the particular time that the partnership ceases to exist. In order to accommodate the calculation of the adjusted cost base immediately before the particular time, under section 53, the proposed amendments to subsection 99(1) provide that the fiscal period of a partnership is considered to end immediately before the time that is immediately before the particular time. The proposed amendments are to come into force on Royal Assent.
The proposed amendments to subsection 99(1) were announced in November 2006 but have not yet received Royal Assent. While awaiting Royal Assent, in situations where a partnership ceases to exist and there is the possibility of double taxation that would otherwise have been eliminated if the proposed amendments to subsection 99(1) of the Act had been enacted, then similar to the position outlined in Technical News No. 9, the CRA is prepared, in the context of a ruling request, to apply the law in a manner such that a taxpayer is not taxed twice on the same amount.
We trust that these comments will be of assistance.
Yours truly,
G. Moore
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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