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: Whether or not the disposition of an interest in a partnership in a particular hypothetical situation is a disposition of a "qualified farm property" that would qualify for the capital gains exemption in subsection 110.6(2) of the Act.
Position: Only one comment offered with respect to subparagraph (a)(i) of the definition "interest in a family farm partnership".
Reasons: The facts given in the hypothetical situations are very specific and seem to deal with a proposed transaction that should only be dealt with as an advance income tax ruling.
XXXXXXXXXX 2000-000522
J. E. Grisé
March 8, 2000
Dear XXXXXXXXXX:
Re: Interest in a Family Farm Partnership
This is in reply to your letter of January 21, 2000, concerning the possible application of the capital gains deduction under subsection 110.6(2) of the Income Tax Act (the Act). It seems that you wish to know how the provision would apply to specific proposed transactions involving a horse breeding business carried on by a partnership.
Since your situation appears to relate to actual proposed transactions, we refer you to our policy in Information Circular 70-6R3, Advance Income Tax Rulings. Paragraph 22 of this circular explains that when a request for a technical interpretation relates to specific proposed transactions, an advance income tax ruling rather than a technical interpretation must be requested. In regard to your submission, we offer a comment below that should be noted if you wish to proceed and request an advance income tax ruling.
We note in your discussion of subparagraph (a)(i) of the definition of "interest in a family farm partnership" in subsection 110.6(1) of the Act, that the partnership is carrying on the business in Canada in which the partnership "was actively engaged on a regular and continuous basis." In our view, the subparagraph does not apply unless
- the individual who owned an interest in the partnership,
- a beneficiary of a personal trust which owned an interest in the partnership or
- a spouse, child or parent of the individual or beneficiary referred to above,
was actively engaged on a regular and continuous basis in the farming business.
We hope our comment is helpful.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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