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:
Whether a limited partnership formed with one general and one nominee limited partner pending a public offering of the limited partnership units can qualify as a small business investment limited partnership as defined in subsection 5102(1).
Position:
No.
Reasons:
Words are clear in paragraph (e) that in order to be a SBILP a limited partner can hold no more than 30% of the units at "all times after (the partnership) was formed".
XXXXXXXXXX 962987
Attention: XXXXXXXXXX
October 24, 1996
Re: 30% Restriction on Limited Partnership Units Holdings
This is in reply to your facsimile transmission of September 9, 1996, and further to our letter of July 31, 1996 (document number 960091). You ask us to reconsider our view that a limited partnership which is formed with one general and one nominee limited partner prior to a public offering of the limited partnership units fails to meet the condition in paragraph 5102(1)(e) of the Income Tax Regulations (the "Regulations").
In our view, the requirement in paragraph 5102(1)(e) of the Regulations is clear and the words do not admit of another interpretation. In order to satisfy the condition therein, no more than 30% of the limited partnership units must be held by one limited partner or group of non-arm's length limited partners. Therefore, where the partnership is formed by filing a declaration under the relevant limited partnerships legislation with only one general and one limited partner, the partnership will fail to be a "small business investment limited partnership" as defined in subsection 5102(1) of the Regulations. Note that the identical requirement is contained in paragraph (e) of the definition of "qualified limited partnership" in subsection 5000(7) of the Regulations and thus our comments extend equally to that provision.
You may wish to pursue the matter of an amendment to the provision with the Department of Finance. We trust our comments assist.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1996
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1996
Email this Content