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.
Dear Sirs:
RE: Transfers of resource partnership interests to corporations under subsection 85(1) of the Income Tax Act
This is in reply to your letter of January 19, 1982 in which you requested clarification of the Department's position on subsection 85(1) rollovers of resource partnership interests to corporations. We regret the delay in issuing a reply.
In our view, subsection 98(5) of the Act sanctions simultaneous transfers of all interests in a partnership under subsection 85(1) to an existing bona fide corporate partner.
A purchaser corporation may temporarily become a partner, with no intention of carrying on a business in common with the other partners. Depending on the facts of the case, we would view this transaction as being in substance either:
a) A sale of resource assets at fair market value by the partnership for shares of the transferor, followed by a distribution of the shares to the partners on a winding up of the partnership; or
b) A wind-up of the partnership with a distribution of the partnership assets to the partners at fair market value, followed by a sale of assets by the partners to the purchaser corporation at the same value.
c.c. Mr. Kaminetsky, Calgary District Office
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© Her Majesty the Queen in Right of Canada, 1982
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© Sa Majesté la Reine du Chef du Canada, 1982
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