16 June 1982 Income Tax Severed Letter A-6661 - [Subsection 206(1) of the Income Tax Act—Foreign Property]

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.

XXXX

B. Toyota (613) 995-0051

Your ref: SSH/CL-81

Attention: XXXX

June 16, 1982

Dear Sirs:

This is in reply to your letter of May 13, 1982 concerning the provisions of subsection 206(1) of the Income Tax Act (the Act).

Where a taxpayer described in paragraph 205(a) of the Act acquires foreign property which is an interest in a partnership, it is our opinion that the subsequent realization of gains and/or profits by the partnership and the method of distributing such amounts would not generally affect the determination of the tax payable under subsection 206(1). This is so since the subsection deals specifically with the fair market value of such property at the time of acquisition.

In reply to your specific questions, it is our opinion that in all three cases the value of the partnership interest would be increased but such increase would not normally be considered for purposes of subsection 206(1) unless such gains or profits are used to acquire additional interests in the partnership (e.g. his proportionate share of any future gains or profits is increased).

The above opinion is our best interpretation of the law as it applies generally. It may, however, not be appropriate in the circumstances of a particular case and is not binding upon the Department.

Yours truly,

for Director Non-Corporate Rulings Division

BT/ab