17 July 2000 External T.I. 2000-0017325 - partnership information returns

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 penalties apply where partnership information return filed voluntarily but later than time if there had been requirement to file?

Position: no

Reasons: wording of 162(7.1) of Act

							           2000-001732
XXXXXXXXXX 							Denise Dalphy
(613) 957-9231
Attention: XXXXXXXXXX 

July 17, 2000

Dear Sirs:

Re: Partnership Information Returns

We are writing in reply to your facsimile transmission dated March 29, 2000 wherein you inquire about the imposition of penalties in connection with the filing of partnership information returns.

Issue

If members of a partnership are not required to file partnership returns because the partnership had five or fewer members (none of which was another partnership) throughout a particular fiscal period, but returns are nonetheless filed, albeit at a time that is later than the time when the members would have been required to file had there been a requirement to file, will penalties apply?

Response

No.

Rationale

1. Subsection 162(7.1) of the Income Tax Act (the "Act") is the authority for the imposition of penalties where a member of a partnership fails to file an information return (as a member of a partnership). A penalty is imposed if there is a failure to file "as and when required by this Act or the regulations and (10) does not set out a penalty for failure" [emphasis added].

2. Paragraph 221(1)(d) of the Act authorises the Governor-in-Council to make regulations "requiring any class of persons to make information returns". Subsection 229(1) of the Income Tax Regulations (the "Regulations" prescribes the filing of partnership information returns by members of partnerships.

3. Subsection 220(2.1) of the Act allows the Minister to waive the requirement for a person to file a prescribed form .... or to provide prescribed information, (however, it also provides that the person must provide the documentation if the Minister requests it). The Minister has exercised his authority under this provision and the exemptions from filing are listed in paragraph 11 of Information Circular 89-5R (the "exemptions") and are applicable to the 1992 and subsequent taxation years.

4. Since members of partnerships who meet the criteria in paragraph 11 of IC-89-5R are not required by this Act or the regulations to file information returns, unless a demand to file was been made by the Minister under subsection 220(2.1) of the Act, subsection 162(7.1) will not apply and penalties will not be imposed where a partnership return was not required to be filed, but was filed after the due date that would have been imposed if the exemptions had not applied.

The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Department. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.

Yours truly,

Paul Lynch
for Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings Directorate

...cont'd