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.
Principal Issues: The CRA currently allows a joint venture to establish a fiscal period that may differ from the fiscal periods of the joint venture participants where the participants have different fiscal periods and there is a valid business reason that justifies a separate fiscal period for the joint venture. The 2011 Federal Budget proposed to limit the tax deferral opportunities for corporations (other than professional corporations) with significant interests in partnerships where the partnership fiscal period is different from the corporation's taxation year. Will the CRA continue to allow a joint venture to use its own fiscal period?
Position: No.
Reasons: Assuming the 2011 Federal Budget proposals are enacted, CRA's administrative position on joint ventures will no longer be consistent with tax policy. It would not be appropriate to allow deferral through a joint venture that is not available through a partnership. Taxpayers who enter into JV arrangements will no longer be eligible to compute income as if the joint venture had a separate fiscal period.
File 2011-040308
2011 Prairie Provinces Tax Conference
Joint Ventures
Q. The CRA currently allows a joint venture to establish a fiscal period that may differ from the fiscal periods of the joint venture participants where the participants have different fiscal periods and there is a valid business reason that justifies a separate fiscal period for the joint venture.
The 2011 Budget proposed to limit the tax deferral opportunities for corporations (other than professional corporations) with significant interests in partnerships where the partnership fiscal period is different from the corporation's taxation year.
Will the CRA continue to allow a joint venture to use its own fiscal period?
CRA Response:
Assuming that the 2011 Budget proposals are enacted, CRA's administrative position on joint ventures will no longer be consistent with tax policy.
It would not be appropriate to allow deferral through a joint venture that is not available through a partnership.
Taxpayers who enter into JV arrangements will no longer be eligible to compute income as if the JV had a separate fiscal period.
For JV participants who have relied on our administrative position, we will offer transitional relief consistent with the transitional relief that is available to members of a partnership.
We will be consulting with affected taxpayers and their advisors prior to providing detailed guidance in writing. If you have any comments or suggestions, please feel free to contact the Partnerships Section of Income Tax Rulings Directorate.
Gwen Moore
June 6, 2011
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