14 July 1995 External T.I. 9515585 - AT-RISK RULES FARMING 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.

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:

	The 1994 Farming Income Guide discusses how the at-	risk rules relate to farming partnerships but 	96(2.1) exempts farming businesses from the at-risk 	rules. 

Position TAKEN:

There is an error in the guide.

Reasons FOR POSITION TAKEN:

5-951558
XXXXXXXXXX Franklyn S. Gillman

Attention: XXXXXXXXXX

July 14, 1995

Dear Sirs:

Re: Farming Limited Partnership and the At-Risk Rules

This is in reply to your letter dated June 9, 1995 wherein you requested clarification regarding the application of losses from a farming limited partnership and the at-risk rules. You requested an explanation why Revenue Canada's 1994 Farming Income Guide (T4003) (the "Guide") discusses the limitation placed on a limited partner claiming farming losses due to the "at-risk" rules, when losses incurred in a farming business are excluded from the at-risk rules by virtue of the provision of subsection 96(2.1) of the Income Tax Act (the "Act").

We have carefully reviewed your comments as it pertains to the Guide and we agree with your comments. The Guide's remarks as they relate to the at-risk rules may be construed incorrectly. Losses from a farming business carried on by a partnership are not restricted by the at-risk rules, however such losses may be restricted under section 31 of the Act.

We would like to take this opportunity to thank you for bringing this fact to our attention and we have informed our T1 Returns and Guides Division of your comments.

Yours truly,

for Director
Manufacturing Industries,
Partnerships and Trusts Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch