1 May 1990 Income Tax Severed Letter RRRR330 - Application of section 116 of the Act where partnerships are involved

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.

DATE May 1, 1990

TO FROM
A David Burton DE Head Office
International Audits Specialty
Rulings
Division Directorate
Roberta Albert
(613) 957-2098

SUBJECT: FILE
OBJET: Section 116 of the Act and DOSSIER 7-0442
Partnerships

We are writing in reply to your round trip memorandum of April 18, 1990 wherein you requested that we provide responses to questions to be used during an upcoming meeting between officials of the Vancouver D.O. and a group of Vancouver tax practitioners. The questions addressed to us concerned the application of section 116 of the Act where partnerships are involved.

We would suggest reversing the two questions so that your question b) becomes a), and question a) becomes b), and responding as follows:

a) With respect to the application of the provisions of section 116 of the Act to the disposition of partnership property.
• i) the assumptions in subsection 96(1) of the Act are not applicable,
• ii) on the disposition of partnership property, each member of the partnership is considered to have disposed of his share of that property, and
• iii) each non-resident partner is a non-resident person referred to in section 116.

In accordance with this position, section 116 applies to a non-resident partner who disposes of his partnership interest which is taxable Canadian property by virtue of subparagraph 115(1)(b)(v) to the partnership in return for certain partnership property. Each remaining partner is considered to be the person referred to in subsection 116(1)(a).

We trust that these responses will be of assistance.

for Director
Business and General Division
Specialty Rulings Directorate
Legislative and Intergovernmental
Affairs Branch