CRA finds that a partnership is not fiscally transparent for patronage dividend purposes

Can a cooperative corporation, that is a member of a limited partnership, deduct patronage dividends computed on the basis of sales made by the partnership to its customers who are members of the cooperative corporation? In responding negatively, CRA indicated that this approach would be contrary to “customer” being defined in s. 135(4) as a customer of the “taxpayer,” which under the s. 96(1) assumptions was to be treated as the partnership rather than its member.

Neal Armstrong. Summary of 29 January 2018 External T.I. 2017-0702731E5 under s. 135(4) - customer.