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: Whether a partnership is required to file information related to the requirements for functional currency reporting under subsection 261(6) of the Act.
Position: Yes.
Reasons: All of the information requested on a partnership information return is prescribed information pursuant to subsection 229(1) of the Income Tax Regulations.
XXXXXXXXXX
2012-047183
J. Gibbons, CGA
April 22, 2013
Dear XXXXXXXXXX:
Re: Functional Currency Reporting Requirements for Partnerships
This is in response to your correspondence dated December 3, 2012, concerning the functional currency reporting requirements for partnerships where a corporate partner has made an election under subsection 261(3) of the Income Tax Act (the "Act").
In particular, you are asking for our views regarding information reporting under subsection 261(6) of the Act. It is your view that since subsection 261(6) of the Act applies in respect of a particular corporation which has elected under subsection 261(3) of the Act, that corporation should bear the responsibility of complying with the information requirements in subsection 261(6) of the Act, notwithstanding that the information relates to the financial results of the partnership. Your concern is that where a partnership does not keep its records in the functional currency of the partner making the election, it could be an administrative burden on the partnership and the other non-electing partners to require the partnership to comply with subsection 261(6). In your view, it is more reasonable to look to the electing partner to maintain the appropriate reconciliations that support the partnership allocation in the functional currency.
Our comments
Subsection 229(1) of the Income Tax Regulations (the "Regulations") provides that every member of a partnership that carries on business in Canada or that is a Canadian partnership or a SIFT partnership at any time in a fiscal period of the partnership shall make for that period an information return in prescribed form containing information that may be required by the prescribed form. It is our view that all of the information required on the T5013, Partnership Information Return, and related summary and slips is prescribed information, in accordance with subsection 229(1) of the Regulations.
With respect to subsection 261(6) of the Act, the CRA requires that the required information be filed with the Partnership Information Return as it is prescribed information for purposes of that return. As a partnership consists of a relationship between partners, we would expect that the partners of a partnership would come to a mutual understanding to ensure compliance with the reporting requirements under the Act and Regulations when one or more partners chooses to make an election under 261(3) of the Act.
We trust these comments will be of assistance.
Yours truly,
G. Moore
for Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2013
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2013
Email this Content