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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Individual in a limited partnership and what happens to his resource pools when he sells his partnership unit.
Position: ITA 66.1, 66.2, 66.8
1) Resource pools can be used after the disposition of the limited partnership unit if not previously deducted.
Reasons: 1) Resource expenses incurred by a partnership reduce the limited partner's adjusted cost base.
February 13, 2003
Mr. Bob Neville, Co-ordinator Luisa A. Majerus
Resource Industries
Technical Application and Valuations Division
Place de Ville, Tower B, 13th Floor
Ottawa ON K1A 0L5
Attention: Richard Cloutier 2002-015159
Limited Partner's Resource Pools
We are writing in response to your email correspondence of July 2, 2002, wherein you requested our views regarding the deductibility of a limited partner's resource pools. You have described a situation in which a limited partner has been allocated both Canadian Exploration Expenses ("CEE") and Canadian Development Expenses ("CDE"), (collectively "resource expenses"), as a partner in a limited partnership but did not claim any deduction with respect to those expenses before disposing of the partnership interest.
Specifically, you have asked us to comment on the availability of a limited partner's cumulative Canadian exploration expenses ("CCEE") and cumulative Canadian development expenses ("CCDE"), (collectively, "resource pools"), after selling the partnership unit.
Resource expenses incurred by a limited partnership in its fiscal period that are allocated to a limited partner may be included in the partner's resource pools to the extent of the partner's share of expenses determined pursuant to section 66.8 of the Income Tax Act ("the Act"). Deductions, with respect to the resource pools, may be claimed pursuant to subsections 66.1(3) and 66.2(2) of the Act.
By virtue of paragraph (h) of the definition of CEE in subsection 66.1(6) and paragraph (f) of the definition of CDE in subsection 66.2(5) of the Act, resource expenses incurred by a partnership are available to a partner only when the partner is a member of a partnership at the end of the partnership's fiscal period.
However, a former partner may continue to claim deductions for resource expenses previously included in the various resource pools.
We trust these comments will be of assistance.
Yours very truly,
Christine Savage
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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