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: Is a sole proprietor precluded from the rollover provided in subsection 98(5) if the business of the partnership involves the trading of marketable securities?
Position: No
Reasons: Rollover is available provided the trading of marketable securities constitutes a business and all other requirements in subsection 98(5) are met.
XXXXXXXXXX Daryl Boychuk, LL.B
2003-004610
November 26, 2003
Dear XXXXXXXXXX:
Re: Technical Interpretation Request
This is in reply to your facsimile of October 29, 2003 wherein you asked us if investing in marketable securities is a business for the purpose of subsection 98(5) of the Income Tax Act (the "Act").
Subsection 98(5) of the Act permits a tax-free rollover of assets from a discontinued partnership to a proprietorship. The rollover applies where, within three months of the termination of a Canadian partnership, one of the former partners carries on the business of the partnership as a sole proprietor using the property received by him as proceeds of disposition of his partnership interest.
In our view, the fact that the activity of a partnership was limited to investing in securities would not, in itself, preclude the application of subsection 98(5) of the Act. However, whether investing in marketable securities constitutes a business can only be determined on the particular facts of each case.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency.
We trust the above comments are of assistance.
Yours truly,
Daryl Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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