Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: A corporation is a partner in a two-tiered limited partnership. The activities of each partnership is the carrying on of a farming business. The sole shareholder of the Corporation is actively engaged on a regular and continuous basis in the farming business of both partnerships Do the shares constitute shares of the capital stock of a family farm corporation in subsection 70(10) of the Act.
Position: Not clear
Reasons: The information provided was too limited.
XXXXXXXXXX 2000-000181
M. Eisner
Attention: XXXXXXXXXX
June 12, 2000
Dear Sir:
Re: "Share of the capital stock of family farm corporation"
Subsection 70(10) of the Income Tax Act (the "Act")
This is in reply to your letter of December 14, 1999, concerning the above-noted subject. We apologize for the delay in replying.
You outlined a situation in which a corporation is a partner in a two-tiered limited partnership structure. The only asset of the corporation is an interest in the top tier limited partnership. You have asked us to assume that each limited partnership is engaged in the active business of farming. The shareholder of the corporation is actively engaged on a regular and continuous basis in the farming business of both limited partnerships. In regard to this situation, you have referred to our earlier letter (file 970245), which discussed a situation where a corporation owned an interest in a limited partnership.
You believe that the shares of the corporation would qualify as a "share of the capital stock of a family farm corporation," if the interests in the top and bottom tiered partnerships are both an "interest in a family farm partnership," as defined by subsection 70(10) of the Act.
Based on the information you provided, we are unable to determine whether property owned by the corporation was attributable to property that has been used by ...a partnership, an interest in which is a family farm partnership of the person (which would be the sole shareholder of the corporation) or of his or her spouse, child or parent, within the share definition in subsection 70(10). This would have to be determined with reference to all of the facts surrounding the partners' interest in both limited partnerships, along with an understanding of the business activities of the corporation, the partnerships and any other individuals beside the shareholder. Based on the information provided, it is not evident whether such an interest exists in either partnership.
We trust that the above comments are helpful. If you are concerned about a proposed transaction, we would be willing to consider it on an advance income rulings basis. The procedures for requesting an advance income ruling are outlined in Information Circular 70-6R3. If the particular transactions are completed, you may wish to make a submission to your local tax services.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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