8 January 1997 External T.I. 9642045 - SECURITIES LENDING

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:

Securities Lending the taxpayer wanted to know the rationale of why we took a position in a previous letter to himself 963814.

Position:

The rules in section 260 do not apply to a partnership

Reasons:

A partnership is not a "person" or a "taxpayer" for purposes of section 260 of the Act

XXXXXXXXXX 964204

Attention: XXXXXXXXXX

January 8, 1997

Dear Sirs:

Re: Securities Lending

This is in reply to your letter of December 16, 1996 in which you request the Department's rationale for the position taken in letter 963814 dated November 26, 1996 to yourself.

Our position as stated in the letter is as follows:

"In our view, a partnership is not to be considered a "person" or a "taxpayer" for the purposes of section 260 of the Act and its partners would not be accorded the treatment provided for in section 260 of the Act."

We still maintain the above noted position as it is based on our interpretation of the provisions of section 260 of the Income Tax Act (the "Act") and note that the administrative position referred to in your letters is not applicable to section 260 of the Act.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch