CRA confirms that a subsequently admitted partner benefits from a s. 34 WIP election made for a professional partnership’s 2017 year

Although the benefit of the election under s. 34 to exclude professional work-in-progress from income is being phased out over a five-year period, that election (in the case of calendar-year practices) cannot be made after 2017. CRA confirmed that since the election is made at the partnership level, where an election was made for the 2017 year of a professional partnership by an authorized partner in accordance with s. 96(3), a partner who is subsequently admitted to the partnership (in the posited example, a personal corporation to which an individual’s partnership interest was assigned) will benefit from the election as to its share of the partnership income.

Neal Armstrong. Summary of 26 March 2018 External T.I. 2017-0734381E5 F under s. 34.