3 August 1989 Ministerial Correspondence 58364 F - Winding-up of a Partnership - Roll-over of Partner's Undivided Interest to a New Corporation

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.

August 3, 1989

Dear Sirs:

Re:  Subsections 85(1) and 98(3) of the Income Tax Act (Canada) (the "Act")

We are writing in response to your letter of July 13, 1989 where you requested a technical interpretation with respect to the application of subsections 98(3) and 85(1) of the Act.

Upon the winding-up of a partnership pursuant to subsection 98(3) of the Act each partner receives an undivided interest in each property of the partnership.  You ask whether subsequent to such a wind-up can a partner utilize subsection 85(1) of the Act to roll his undivided interest in each property to a new corporation.

It is our view that the words in subsection 85(1) of the Act do not preclude its application, simply because the property to be transferred was received by the transferor pursuant to subsection 98(3) of the Act.  However, the consecutive use of subsections 98(3) and 85(1) of the Act may, in certain circumstances, constitute a misuse or abuse of the provisions of the Act for purposes of subsection 245(4) of the Act.

As explained in paragraph 24 of Information Circular 70-6R any written or verbal opinions are not rulings and are not binding upon Revenue Canada, Taxation in any respect of any taxpayers.

Yours truly,

for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch