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.
Your file Votre référence
Our file Notre référence
3-3014
R. Albert
(613) 957-2098
MAY 28 1990
Re: Non-arm's length transactions
We are writing in reply to your verbal request for comments on the Department's position concerning transactions between non-arm's length parties.
In particular, you have requested comments concerning the deductibility of fees paid by a limited partnership to another party who does not deal at arm's-length with the general or limited partners of the partnership and we are prepared to provide the following. In general, where a limited partnership engages another party to perform services in connection with a business carried on by the partnership and the other party does not deal at arm's length with the general partner of the partnership or some or all of its limited partners, the fees charged for such services would not be rendered non-deductible under the Income Tax Act, solely because of the non-arm's length relationship. However, such arrangements may be subjected to closer scrutiny upon audit to verify the reasonableness of the charges.
We trust that these comments will be of assistance.
Yours truly,
for Director
Business and General Division
Specialty Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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