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.
QUESTION
6. Revenue Canada has indicated that where a limited partner has financed all or a portion of the purchase price of his partnership interest with limited recourse borrowings, the Department considers that the limited recourse borrowings constitute an amount or a benefit that has been granted for the purpose of reducing a loss that a taxpayer may sustain by virtue of his being a member of the partnership or by virtue of holding or disposing of his partnership interest. Therefore, such limited recourse borrowings will reduce the limited partners' at-risk amount.
Does a government guarantee of a partner's loan result in a partner having a limited recourse borrowing for purposes of the partnership at-risk rules?
ANSWER
6. For purposes of the partnership at-risk rules, it is our view that a guarantee of a partner's loan which is used to finance all or a portion of the purchase price of a partnership interest would be treated in the same manner as limited recourse or non- recourse financing of acquisitions of partnership interests. Consequently, the partner would be a limited partner pursuant to paragraph 96(2.4)(b) of the Act and the amount of the loan that is subject to the guarantee would reduce the limited partner's at-risk amount under paragraph 96(2.2)(d) of the Act. The fact that the loan is guaranteed by a government would have no bearing on this result.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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