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.
File 902633
1990 Round Table
QUESTION I50
Section 85 Transfer by a Non-resident
Real property, an interest therein or an option in respect thereof that is owned by a non-resident person (other than a non-resident insurer) does not qualify as "eligible property", as defined in subsection 85(1.1), for the purposes of an election pursuant to subsection 85(1). Does a non-resident's interest in a partnership, the assets of which are primarily real property, qualify as "eligible property" for the purposes of subsection 85(1)?
RESPONSE
This question was answered at the 1986 tax conference.[FN1.: "Revenue Canada Round Table", in Report of Proceedings of the Thirty-Eighth Tax Conference, 1986 Conference Report (Toronto: Canadian Tax Foundation, 1987), 51:1-51:43, at 51:26.] It is the view of the Department that, for purposes of section 85 of the Act, an interest in a partnership is not considered to be an interest in its underlying assets. Therefore, an interest in a partnership held by a non-resident as capital property would qualify as "eligible property" under paragraph 85(1.1)(a), notwithstanding the fact that the assets of the partnership consist primarily of real property.
However, if a partnership is formed as one of the steps in a series of transactions that is designed to circumvent the provisions of 85(1.1), the provisions of section 245 could apply.
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