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 representative has asked for a minor change to a ruling given with respect to the active business income of a professional corporation pursuant to a contract to provide professional services to a partnership of which the principal shareholder is a member. The change is to amend the allocation formula for both Electing and Non-Electing Partners so that the formula also takes into account the particular partners' capital contributions.
Position: The change was accepted.
Reasons: Similar to other rulings.
XXXXXXXXXX 2010-035718
XXXXXXXXXX , 2010
Dear XXXXXXXXXX :
Re: Supplementary Advance Income Tax Ruling
XXXXXXXXXX (the "Partnership")
XXXXXXXXXX (the " Electing Partners")
We are writing in response to your recent letter in which you requested amendments to Advance Income Tax Ruling 2009-031826 (the "Ruling"). Terms defined in the Ruling have the same meaning when used in this letter.
As requested in your letter, the following amendments have been made to the Ruling:
Paragraph 6(e) will be replaced by the following:
The formula for the allocation of Income for a Taxation Year will be amended to provide that an Electing Partner's allocation of Income for a Taxation Year will be dependent solely on the Electing Partner's capital contribution to the Partnership and factors (including time) connected to the Non-Professional Services carried out by the Electing Partner on behalf of the Partnership. For greater certainty, the Partnership Agreement will make it clear that the calculation of an Electing Partner's Income for a Taxation Year will not take into account any Professional Services provided by the Electing Partner's ProCorp, nor will it take into account any time spent by the Electing Partner performing Professional Services in his or her capacity as an employee of his or her ProCorp.
Paragraph 6(f) will be replaced by the following:
A provision will be added to ensure that all Non-Electing Partners will continue to provide their Professional Services directly to the Partnership. Further, the Partnership Agreement will clarify that a Non-Electing Partner's allocation of Income for a particular year will be based on the Non Electing Partner's capital contribution to the Partnership and factors connected to the Professional Services and Non-Professional Services carried out by the Non-Electing Partner on behalf of the Partnership.
We confirm that the changes described above will not affect the Ruling, which will continue to be binding on the CRA within the constraints set out therein.
Yours truly,
XXXXXXXXXX
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2010
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2010
Email this Content