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.
DRAFT
International Fiscal Association 1995 Conference
QUESTION 8
Clause 95(2)(a)(ii)(C) - "Specified Member" of a Partnership
How will Revenue Canada assess whether a foreign affiliate member of a partnership has a sufficient degree of involvement in the business of partnership such as not to be considered a specified member of the partnership for the purposes of clause 95(2)(a)(ii)(C).
Department's Position
In order to determine whether the activities of a member of a partnership are sufficient for that member to be excluded from being considered a "specified member" of the partnership, all the facts of the situation must be reviewed. However, Revenue Canada considers that a person is actively engaged in a business of a partnership for the purposes of the definition of "specified member" in subsection 248(1) of the Act, where that person is directly involved in the management and/or the daily activities of the business and where that involvement takes place on a regular, continuous and substantial basis throughout the period under consideration such person will not be considered a specified member of that partnership. As a general rule, employees of the member affiliate must devote time and effort to the partnership business in addition to the capital contribution made by the member and the member's share in the income of the partnership would therefore normally not be determined solely on the basis of its capital contribution.
Prepared by: Olli Laurikainen
951455
May 31, 1995
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