Devon – Tax Court of Canada finds that a partnership property drop-down to a 2nd-tier partnership did not preclude continued successored expense deductions

CRA unsuccessfully took the position before Hogan J that when, following an acquisition of control of a corporation holding an oil and gas partnership, the partnership properties were dropped down to a 2nd tier partnership, the benefit of the look-through rule in s. 66.7(10)(j) was lost, so that the corporation could no longer claim successor deductions in respect of those properties.

In addition to this successoring point, Devon stands for the proposition that "in a tiered partnership, the source and location of income is preserved through each level of partnership."

Neal Armstrong.  Summaries of Devon Canada Corp. v. The Queen, 2013 TCC 415 under s. 66.7(10)(j) and s. 102(2).