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: will 256(2.1) apply to a reorg of a partnership where the individual partners incorporate their business activities?
Position: Generally, not in and of itself.
Reasons: If for reasons other than tax reasons. Determination of reasons is a question of fact.
S. Tevlin
XXXXXXXXXX (613) 957-2093
2000-003862
Attention: XXXXXXXXXX
July 26, 2000
Dear Sirs:
Re: Technical Interpretation
In this letter we are writing in response to our telephone conversations wherein you requested our opinion as to certain issues raised in our letter dated July 20, 2000 (the "Letter").
As noted in the Letter," a direction in accordance with subsection 256(2.1) of the Act is based on the facts on a year-to-year basis, and therefore we are not able, pursuant to paragraph 15(j) of IC-70-6R3, to rule that this provision will not be applied."
However, we are prepared to offer the following general comments. Where a business that was previously carried on in a partnership is subsequently carried on by the former partners and no longer in partnership for reasons other than tax reasons, this fact, in and of itself, would generally not cause subsection 256(2.1) of the Act to be applicable should the former partners incorporate their business activities. A particular determination of the reasons for such reorganization would be a question of fact.
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 Canada Customs and Revenue Agency.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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