CRA finds that s. 129(6) deemed business income arises during taxation year of associated payer rather than payee

Corporation B, which carried on an active business, paid rent to Corporation A. As a result of an acquisition of its control, Corporation B ceased to be associated with Corporation A and had a fresh taxation year commence on March 28, 2018.

CRA found that “any taxation year” in s. 129(6) referred to taxation years of Corporation B rather than Corporation A, so that s. 129(6) only deemed Corporation A to have active business income from the rents generated by it during the short Corporation B taxation year ending on March 27, 2018 rather than for all of Corporation A’s calendar taxation year.

Neal Armstrong. Summary of 6 June 2019 External T.I. 2019-0795751E5 under s. 129(6).