3 December 1990 Ministerial Correspondence 903344 F - Shares Issued as Consideration for All or Substantially All of the Assets Used in an Active Business

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.

19(1)

December 3, 1990

Dear Sirs:

Re:  Partnerships and Section 54.2 of the Income Tax Act (the "Act")

This is in reply to your letter of November 16, 1990, requesting a technical interpretation with respect to the provisions of section 54.2 of the Act. You question whether the word "person" includes a partnership, for the purposes of section 54.2 of the Act, where a partnership has disposed of property that consisted of all or substantially all of the assets used in an active business carried on by that partnership to a corporation for consideration that includes shares of the corporation.

Our Comments

Although a partnership is not a "person", section 96 of the Act requires partnerships to calculate their income as if a partnership were a separate person resident in Canada. Accordingly, it is our view that section 54.2 does apply to partnerships which have disposed of all or substantially all of the assets used in an active business.

We trust that our comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch