CRA confirms that s. 96(1.1) agreements have retroactive effect

CRA considers that an agreement under s. 96(1.1) to allocate income to a retired partner has retroactive effect to the time that she retired.  Accordingly, if she retired at January 31, 2014, which was the end of an off-calendar fiscal period previously elected under s. 249.1(4), she will be required to add 11 months’ worth of income pursuant to s. 34.1(1) even if the agreement to allocate income to her is not entered into until January 2015.

Neal Armstrong. Summary of 10 September 2014 T.I. 2014-0522551E5 under s. 96(1.1).