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.
Principal Issues:
business transferred to a partnership after acquisition of control
Position:
Question of fact
Reasons:
Generally a corporate partner would carry on the business carried on by the partnership.
5-951491
XXXXXXXXXX J. Teixeira
(613) 957-8953
Attention: XXXXXXXXXX
January 5, 1996
Dear Sirs:
Re: Technical Interpretation subparagraph 111(5)(a)(i) of the Income Tax Act (the "Act")
This is in reply to your letter of June 1, 1995, requesting an interpretation of the application of subparagraph 111(5)(a)(i) of the Act to an acquisition of control in a particular situation. The situation described involved the transfer of the business carried on by a corporation, after the acquisition of control, to a partnership in which the corporation is a general partner.
The situation outlined in your letter appears to relate to an actual situation; therefore, confirmation of the tax implications of such a situation is only given in reply to an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R2. Where the particular situation relates to transactions that have been completed, the enquiry should be directed to the local tax services office where the taxpayer files its returns. While we are unable to comment on the particular situation described in your letter, the following general comments may be of assistance to you.
It is primarily a question of fact whether a corporation is carrying on a business carried on by a partnership in a situation such as the one described in your letter. The Department expressed the view, in its answer to Question # 37 of the Revenue Canada Round Table at the 1989 Canadian Tax Foundation Conference, that a corporate partner would normally be carrying on the business carried on by a partnership. However, the addition of other assets upon the introduction of other partners may result in a different business being carried on by the partnership. In addition, the answer indicated that subsection 245(2) of the Act may apply depending on the facts and circumstances of a particular situation.
Where the requirements of subparagraph 111(5)(a)(i) of the Act are met, it is our opinion that an automobile manufactured by one manufacturer and an automobile manufactured by another manufacturer would ordinarily be considered to be "similar properties" for the purposes of subparagraph 111(5)(a)(ii) of the Act.
The foregoing comments are not rulings and, in accordance with the practice referred to in Information Circular 70-6R2 dated September 28, 1990, are not binding on Revenue Canada.
Yours truly,
for Director
Reorganization and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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