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:
This file concerns the calculation of a corporate partner's share of capital of a partnership where the income of the partnership is zero.
Position TAKEN:
Share would be zero.
Reasons FOR POSITION TAKEN:
Wording of paragraph 181.2(3)(g) is clear.
952491
XXXXXXXXXX Michael Cooke
Attention: XXXXXXXXXX
October 6, 1995
Dear Sirs:
Re: Paragraph 181.2(3)(g) of the Income Tax Act (the Act)
This is in reply to your facsimile letter of September 19, 1995, wherein you requested our opinion on the interpretation of paragraph 181.2(3)(g) of the Act and the computation of capital of a corporate partner where the partnership has no income or loss for the year.
Paragraph 181.2(3)(g) requires a corporation that is a member of a partnership at the end of a year to include in its capital, "...that proportion of the total of all amounts...that would be determined under this paragraph and paragraphs (b) to (f) in respect of the partnership...that the member's share of the partnership's income or loss for that period is of the partnership's income or loss for that period,...".
It is your view that based on a strict reading of this paragraph, no capital of the partnership is allocated to a corporate member where there is no income or loss of the partnership to allocate.
We concur with your view. While the occasions whereupon a partnership's revenue and expenses will be exactly the same are rare it is clear that this result was unintended. Accordingly, we have brought this matter to the attention of officials at the Department of Finance.
We trust our comments will be of assistance to you.
Yours truly,
F. Lee Workman
Section Chief
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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