21 June 1994 External T.I. 9414485 - NON STATUTORY AT-RISK RULES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principales Questions:

Does Revenue Canada accept the finding of the decision in Signum that exempt interests are not subject to at-risk limitations ?

Position Adoptée:

yes

Raisons POUR POSITION ADOPTÉE:

See Appeal's Decision # 89-9R dated July 9, 1991.

		5-941448
XXXXXXXXXX	M. Querry

Attention: XXXXXXXXXX

June 21, 1994

Dear Sirs:

Re: Application of the at-risk rules

We are writing in reply to your letter dated May 27, 1994 wherein you requested our comments on whether the non-statutory at-risk rules still apply to "exempt interests" given the decision in The Queen v. Signum Communications Inc., 91 DTC 5360, (F.C.A.).

Our comments

As a result of this decision, where a partnership interest qualifies as an exempt interest, as defined by subsection 96(2.5) of the Income Tax Act, the restriction imposed by paragraph 20 of IT-138R on the deductibility of losses by a partner no longer represents the Department's position. Consequently, there is no restriction on the amount of loss that may be claimed by a limited partner holding such an interest.

Unless as otherwise stated, the reference to statute is to the Income Tax Act (S.C. 1970-71-72, c.63 as amended) consolidated to June 10, 1993.

The above comments are an expression of opinion only and, as explained in paragraph 21 of Information Circular 70-6R2, are not binding on the Department.

Yours truly,

for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch