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.
Assessing and Enquiries Specialty Rulings
Directorate Directorate
J.M. Legault S. Leung
Director 957-2116
Returns Processing
Attention: D.I. Wyse
Prescribed forms required to be Filed pursuant to subsections 85(1), 85(2), 97(2) and 98(3)
This memorandum is in response to yours dated July 6, 1989 with respect to the above-referenced prescribed forms.
The Income Tax Act (the "Act") and the Income Tax Regulations (the "Regulations") do not specify how many copies of the prescribed forms are required to be filed and who should file the forms (whether the transferor, the transferee or both). The Act only requires that the transferor and the transferee with respect to an election made pursuant to subsection 85(1), 85(2) or 97(2) must jointly elect in prescribed form and within the time referred to in subsections 85(6) or 96(4), as the case may be. Pursuant to subsection 98(3), all of the former partners must jointly elect in prescribed form and within the time referred to in subsection 96(4) of the Act. The word "prescribed" is defined under subsection 248(1) of the Act to mean, in the case of a form or the information to be given on a form, prescribed by order of the Minister.
Therefore, it is our view that the number of copies of the prescribed forms that are required to be filed is at the discretion of the Minister. Since the Act is silent on who should file the prescribed form, we would assume that an election form or forms filed by the transferor, the transferee or both is or are acceptable.
T2057 and T2058
21(1)(b) Our comments with respect to your proposed manner of processing these election forms are as follows:
1) 21(1)(a)
2) Provided that the taxpayers in question are in agreement and have provided the appropriate authority for one person to file the election on their behalf your proposal to require only one T2057 to be filed would appear to be feasible. However, since subsection 85(1) requires that the taxpayer and the transferee corporation jointly elect the Department would not be able to insist that such a procedure be adopted. In our view there may be valid reasons why taxpayers wish to file separate elections under subsection 85(1),e.g. confidentiality, different taxpayers may wish to elect at different agreed amounts, etc.
3) Where a taxpayer has received property from a limited partnership under subsection 98(3), a provision in the partnership agreement authorizing one party to elect on behalf of all of the former partners on a subsequent transfer to a corporation under subsection 85(1) may not be valid since the partnership will have ceased to exist and the partnership agreement would probably no longer be in effect. It is, however, possible that a partnership agreement can be drafted in such a manner that it will survive the dissolution of the partnership.
T2059
21(1)(b)
T2060
It is your proposal to accept one T2060 to be filed with attachments, such as power of attorney or partnership agreement and a list of all former partners. The election would contain the name, address, social insurance number or account number of all the parties involved and a breakdown would be required to show each former partner s interest in the partnership and other information as required on the T2060. The T2060 would be filed in the designated partner's file. You asked us whether a T2060 is required for each former partner and whether the penalty is required to be paid by each former partner.
21(1)(a) 21(1)(b)
Director
Reorganizations and Non-Resident Division
Specialty Rulings Directorate
Legislative and Intergovernmental
Affairs Branch `
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© Her Majesty the Queen in Right of Canada, 1989
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