CRA confirms the anomalous application of the inter-provincial income allocation rules to SIFT partnerships

Reg. 402(6) provides that a corporate partner picks up its proportionate share of gross revenues and salaries and wages attributable to each of the partnership’s permanent establishments for purposes of the application of the inter-provincial income allocation rules in Part IV of the Regulations.

CRA has confirmed that this rule applies even where the partnership is a SIFT partnership earning taxable non-portfolio earnings, so that the partner is treated under s. 96(1.11) essentially as the common shareholder of a taxable Canadian corporation.

Neal Armstrong.  Summary of 7 August 2013 T.I. 2012-0460511E5 under Reg. 402(6).