14 December 2000 Internal T.I. 2000-0059387 - Partnership

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 partnership

Position: yes

Reasons: contract shows partnership at common law

			December 14, 2000

	Revenue Collections Directorate	Partnerships Section
	CPP/EI Eligibility Division	Denise Dalphy
	25 McArthur Street, Room 101	957-9231
	Vanier Tower C

	Attention:  Paul Rémillard
			2000-005938

		Primary Health Care Partnership (the "Partnership")

This is in response to your memorandum dated November 30, 2000, wherein you have asked for our views on whether the proposed Partnership will qualify as such under the Income Tax Act.

In our opinion, the proposed Partnership will be a partnership at law, and the provisions of the Income Tax Act that relate to the computation of partnership income/loss will apply. In particular, the following clauses of the draft Partnership Agreement support this position:

* provisions for dissolution of Partnership
* authority of Management Committee to make decisions that bind Partnership
* signing authority of Partnership
* provisions for Partnership draws
* provisions preventing sale/assignment/encumbering Partnership interests
* indemnification clause for gross negligence of a Partner
* provision preventing Partner from contracting with others on behalf of Partnership outside the normal scope of the Partnership business or contrary to the Partnership Agreement
* provisions for admission/withdrawal of Partners

While we have not been asked for any further opinions relating to the income tax consequences that will follow from the implementation of the Partnership Agreement, we are concerned that there may be an issue of constructive receipt. It appears that pursuant to the Medical Care Insurance Act, 1999, which came into force on April 1, 2000 (and in respect of which Regulations do not seem to have been enacted as yet), it is the physician and not the partnership that is entitled to the fees for services. The taxpayers representative, XXXXXXXXXX , has been so advised.

Please contact the writer at 957-9231 if we can be of further assistance.

Steve Tevlin
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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