CRA notes that income allocated under s. 96(1.1) can have specific sourcing, e.g., as dividend income

CRA declined to comment specifically on a scenario in which a Canadian professional partnership, which holds a 70% interest in a corporation carrying on a business ("Opco"), agrees with a retiring partner under s. 96(1.1) that he will preserve a right to a share of the dividends that may eventually be paid by Opco to the partnership. However, CRA noted that "the presumptions in subsection 96(1), in particular, those respecting the nature of items of income, should apply respecting the part of the income shared by each partner of the partnership, including the departing partner."

CRA also noted that the departing partner generally could claim a capital loss if the only amounts he would thereafter receive from the partnership would be a share of Opco dividends determined in accordance with the s. 96(1.1) agreement, if he happened to have a positive adjusted cost base for his partnership interest after taking into account all his partnership distributions.

Neal Armstrong. Q. 17 of 9 October 2015 APFF Roundtable under 2015 APFF Conference.