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: In order for subsection 98(5) to apply, must the Partner carry on the business throughout the 3 month period commencing upon the dissolution of the former partnership, or can the Partner simply commence carrying on the business within this period?
Position: The 3 month period described in subsection 98(5) addresses when the business must recommence, which is at any time during the 3 month period. Whether the proprietor carries on the former partnership business and continues to use, in the course of that business, the partnership property acquired, is a question of fact that can only be determined based on all of the facts and circumstances.
Reasons: Text of the provision.
2025 CTF Annual Tax Conference
CRA Round Table
Question 11: Subsection 98(5)
Subsection 98(5) requires that within 3 months of a Canadian partnership having ceased to exist, one of the members of the partnership (the proprietor) carries on the business that was the business of the partnership. In order for subsection 98(5) to apply, must the proprietor carry on the business throughout the 3-month period commencing upon the dissolution of the former partnership, or can the proprietor recommence carrying on the business within this period?
CRA Response
The 3-month period described in subsection 98(5) addresses when the business must recommence, which is at any time during the 3-month period.
Whether the proprietor carries on the former partnership business and continues to use, in the course of that business, the partnership property acquired, is a question of fact that can only be determined based on all of the facts and circumstances.
Anna Flisfeder
2025-108076
December 2, 2025
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