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:
Where a joint venture makes payments to contractors for construction work performed on behalf of the joint venture will the CCRA look to the primary business of the JV or to the members for purposes of reporting such payments?
Position: Look to members.
Reasons: JV not a separate entity for purposes of Act.
2000-001620
XXXXXXXXXX S. Tevlin
(613) 957-2093
Attention: XXXXXXXXXX
August, 9, 2000
Dear Sirs:
Re: Business Activity of a Joint Venture
We are writing in response to your letter dated March 15, 2000 wherein you requested our comments on the determination of the "primary business activity", in the context of a joint venture, with respect to the requirement that payments made to construction contractors to be reported to the Canada Customs and Revenue Agency (the "CCRA").
In particular you describe a joint venture which is actively engaged in building commercial/retail plazas for rental purposes. All costs of the project would be paid by the joint venture. Each member of the joint venture would be apprised of its share of the cost incurred during the project and would contribute their share accordingly.
Your query is whether the CCRA will, in making the determination, be examining the joint venture as the reporting entity itself, or will it be basing its decision on the underlying business activities of the members of the joint venture?
The new rules apply to every person or partnership, whose income is derived primarily from construction and who pays or credits amounts to contractors providing construction goods or services. Since a joint venture is not a person or partnership for tax purposes it is the CCRA's position that the members of such joint venture who meet these tests will be required to report.
We trust our comments will be of assistance to you.
The foregoing comments are given in accordance with the practice referred to in paragraph 21 of IC-70-6R3, and are not binding on the CCRA.
Yours truly,
Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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...cont'd
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