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.
Principal Issues: Would the proposed partnership structure and transaction be suitable to accomplish capital gains tax deferral?
Position: No response was given since it appears to be a factual situation involving a partnership. Since the transaction involves the sharing of income through a partnership with minor children and a partial estate freeze we cautioned about possible application of section 103 of the Act.
Reasons: This is a proposed transaction and we are being asked to confirm the tax consequences outside of a ruling request.
XXXXXXXXXX 2004-007917
Shaun Harkin, CMA
November 3, 2004
Dear XXXXXXXXXX:
Re: Technical Interpretation Request: Subsection 97(2)
We are writing in reply to your letter of June 2, 2004 wherein you ask whether the proposed partnership transaction would accomplish capital gains tax deferral.
Your question appears to relate to a specific factual situation. As noted in Information Circular 70-6R5, we do not provide opinions with respect to proposed factual transactions other than in reply to an advance income tax ruling request. We would be pleased to consider your application for an advance ruling, should you decide to proceed in that manner. Advance income tax ruling requests must include copies of all relevant documents and in your particular situation should include the various partnership agreements and any documents concerning the ownership of property. Please refer to Information Circular 70-6R5 for further information regarding information requirements for an advance income tax ruling request.
Please note that, with respect to the use of partnership structures in estate freezes, we stated, in response to question 13 at the 1992 Canadian Tax Foundation Conference Round Table, that whether or not a partnership is used for estate-freezing purposes, the allocation of income within a partnership should recognize the capital contributions of the partners, as well as the non-monetary contributions of each partner. Otherwise, subsection 103(1) or (1.1) of the Income Tax Act may apply.
We trust our comments will be of some assistance.
Yours truly,
Wayne Antle, CGA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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