23 October 1996 External T.I. 9611035 - QUALIFYING FISCAL PERIOD PROFESSIONAL CORPORATION

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.

									961103
XXXXXXXXXX							Cal Brown
(613) 957-8980

Attention: XXXXXXXXXX

October 23, 1996

Dear Sirs:

Re: Section 34.2 of the Income Tax Act (the "Act")

This is in reply to your letters of March 25, 1996 concerning section 34.2 of the Act. We apologize for the delay in replying to your request.

In one of your letters you describe a situation where a professional corporation ("PC") is a member of a partnership that has a non-calendar fiscal period. The PC has always filed on the calendar year.

It is our view that in these circumstances that PC, which has always filed on a calendar year basis, cannot be said to have a fiscal period that ends at the end of 1995 because of application of paragraph 249.1(1)(b) of the Act for the purposes of paragraph (b) of the definition of "qualifying fiscal period" in subsection 34.2(1) of the Act. Consequently, it is our view that the only "qualifying fiscal period" is the fiscal period of the partnership which files on a non-calendar year basis.

With respect to your two letters of March 25, 1996 concerning the consolidation of one business involving a second-tier partnership and the consolidation of two businesses involving a second-tier partnership, these appear to involve actual cases. Consequently, we are not prepared to provide comments with respect to these matters except in response to a request for an advance income tax ruling.

Yours truly,

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