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: Under the particular hypothetical situation, is it possible for the members of a particular partnership to make a multi-tier alignment election under subsection 249.1(9) so as to cause the first aligned fiscal period of each partnership in the tiered partnership structure to end on January 31, 2012?
Position: Yes
Reasons: The relevant provisions allow the multi-tier alignment election to be made for January 31, 2012 in this scenario.
XXXXXXXXXX
2012-044445
April 24, 2012
Dear XXXXXXXXXX :
Re: Multi-tier alignment election rules
We are writing in reply to your letters dated April 18, 2012 and April 17, 2012 which are further submissions to your initial letter dated October 27, 2011, wherein you inquire whether a multi-tier alignment election under subsection 249.1(9) of the Income Tax Act (the “Act”) is possible in a particular situation so as to cause the first aligned fiscal period of each partnership in the multi-tier partnership structure to end on the specified particular day of January 31, 2012.
Three related corporations (BCo, CCo and DCo) have December 31st year-ends. BCo, CCo and DCo are the members of a top-tier partnership (Partnership X) and each has a significant interest in Partnership X. BCo and Partnership X are the members of the bottom-tier partnership (Partnership Y). Partnership X has an established fiscal period end of December 31st. Partnership Y has an established fiscal period end of January 31st.
The issue is whether it is possible for the members of Partnership X to make a multi-tier alignment election under subsection 249.1(9) so as to cause the first aligned fiscal period of Partnership X and Partnership Y to end on January 31, 2012. Partnership X would have a December 31, 2011 fiscal period end and then a short fiscal period of January 1, 2012 to January 31, 2012 in order to align to a common fiscal period end of January 31, 2012 for both Partnership X and Partnership Y.
Our Comments
Subsection 249.1(9) states as follows:
Multi-tier fiscal period alignment—one-time election -- The members of a partnership to which paragraph (1)(c) would apply if it were read without reference to this subsection may elect (in this subsection and subsections (10) and (11) referred to as a “multi-tier alignment election”) to end a fiscal period of the partnership on a particular day if
(a) as a consequence of the multi-tier alignment election, the fiscal period of the partnership, and of each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), ends on the particular day;
(b) the particular day is before March 22, 2012; and
(c) subsection (10) applies to the multi-tier alignment election.
Accordingly, in our view, the members of Partnership X may elect to make a multi-tier alignment election under subsection 249.1(9) so as to cause the first aligned fiscal period of Partnership X and Partnership Y to end on January 31, 2012. Partnership X would have a December 31, 2011 fiscal period end based on its established fiscal period end of December 31st and would then have a subsequent short fiscal period of January 1, 2012 to January 31, 2012 in order to align to a common fiscal period end of January 31, 2012 for both Partnership X and Partnership Y. In our view, as the fiscal period of each partnership to which the election applies would be 12 months or less, such an election would be considered to be a valid multi-tier alignment election if the remaining conditions in subsection 249.1(10) of the Act are also met.
We trust that these comments will be of assistance.
Yours truly,
G. Moore
For Director
Business and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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