19 January 2015 External T.I. 2015-0564641E5 - Spousal and Business Partners

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: 1. General information requested about personal and business partnerships.

Position: 1. No position taken. General information provided.

Reasons: 1.It is a question of fact whether individuals are spouses, common-law partners or business partners.

January 19, 2015

XXXXXXXXXX
2015-056464
Robert Dubis, CPA, CA

Dear XXXXXXXXXX:

We are replying to your correspondence of December 18, 2014 and January 8, 2015. You ask how spousal partners and business partners are distinguished for the purposes of the Income Tax Act ("Act").

This technical interpretation provides general comments about the provisions of the Act and related legislation.  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Generally, for the purposes of the Act, a spouse is a person to whom a taxpayer is legally married. For tax years after 2000, the term common-law partner in respect of a taxpayer at a particular time is:

• a person who at that time cohabits in a conjugal relationship with the taxpayer and has done so throughout a continuous period of at least 12 months that ends at that time; or
• a person who at that time cohabits in a conjugal relationship with the taxpayer and is the parent of a child of the taxpayer for one of the following reasons:
  • the person is the legal parent of the child; or
  • the child is wholly dependent on the person for support and the person has, in law or in fact, the custody and control of the child (or did immediately before the child turned 19 years of age).

For purposes of the Act, a spouse or common-law partner may be either an individual of the same sex or the opposite sex of the taxpayer. You have asked whether the absence of "Mr." before a male name indicates a particular relationship or partnership with another individual. The use of, or absence of, "Mr." does not dictate any particular relationship for income tax purposes.

In the context of a business, the Act does not define a partnership, but outlines the tax consequences if one exists. Generally speaking, a partnership is the relation that subsists between persons carrying on business in common with a view to profit. The determination of whether a partnership exists for income tax purposes is a matter of common or civil law. For guidance on whether a particular arrangement at a particular time constitutes a partnership, reference should be made to the relevant provincial law on the subject.

It is a question of fact whether individuals are either spouses or common-law partners, or business partners. However, where individuals enter into a business partnership, that fact in itself does not otherwise create or alter any personal relationship between those people for purposes of the Act.

In order to assist taxpayers who have submitted written enquiries, staff from the Canada Revenue Agency may, as required, contact taxpayers by telephone for the purpose of clarifying their enquiry or informing the taxpayers of existing publications which may resolve their enquiry on an efficient basis. While telephone contact generally expedites many enquiries, we apologize if our efforts to contact you by telephone were not suitable.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate