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 CCRA's position regarding the inclusion of partnership production revenues in the calculation of successor income remains the same as in our reply to question 11 of the 1994 Round Table in the Canadian Petroleum Tax Journal.
Position: Yes.
Reasons: No change in position since then.
XXXXXXXXXX 2000-003390
D. Shugar
December 14, 2000
Dear XXXXXXXXXX:
This is in reply to your letter of June 23, 2000 in which you ask whether the Canada Customs and Revenue Agency's (the "CCRA") position regarding the inclusion of partnership production revenues in the calculation of successor income remains unchanged from our reply given to question 11 of the Revenue Canada Round Table at the 1994 Canadian Petroleum Tax Society Conference.
Our position remains unchanged from that stated in our reply to the above-mentioned Round Table question. That question and our reply is reproduced below.
Successor Rules
A person acquires control of Company A thereby causing Company A's resource pools to be successored. Subsequently, Company A transfers all its resource properties to a partnership electing under subsection 97(2) of the Act at a nominal amount.
Will Company A's proportionate share of production revenue applicable to it by the partnership be considered to be income under, for example, clause 66.7(3)(b)(i)(C) of the Act which is eligible for successor pool deductions?
Department's Position
Company A's proportionate share of the partnership's production revenue from a particular transferred resource property would be considered as income attributable to production from that particular property for the purpose of clause 66.7(3)(b)(i)(C) and clauses 66.7(4)(b)(i)(B) and (5)(b)(i)(B) (formerly subclauses 66.7(4)(b)(i)(A)(II) and (5)(b)(i)(A)(II) of the Act, respectively). However, in a situation wherein immediately before the change in control of Company A, it had an interest in a partnership in which the underlying assets included a resource property, paragraph 66.7(10)(j) of the Act would apply to Company A in respect of such resource property.
(Underlined text added.)
We trust our comments will be of assistance to you.
Yours truly,
John Chan, CA
Manager
Resource Industries Section
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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