RC will permit a film limited partnership to report its revenue (including revenue subject to a revenue guarantee) on a cash basis (on the authority of Boosey and Hawkes (Canada) Ltd. 84 DTC 1728 (TCC)), if the cash basis truly reflects the income position of the taxpayer and provided that the flow of cash from the viewers through the distributors and sub-distributors or others to the limited partnership is not artificially dammed. In the case of a TV series, timing of the inclusion in income of the limited partnership of amounts received by the distributor will depend upon the agreements between the parties and the weight or relevance that a court will give to any conditions included in those agreements.
Where a put of a partnership interest is exercisable before income will be receivable by the partnership in an amount equal to the revenue guarantee, RC will examine their arrangement to determine whether the revenue flow to the partnership is artificially dammed.