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: Whether an interest in a partnership must have been held for at least 24 months in order to qualify as an "interest in a family farm partnership" within the meaning of subsection 110.6(1).
Position: Although partnership must have been in existence for at least 24 months, there is no such requirement as regards the partnership interest.
Reasons: If a partnership has not been in existence for at least 24 months, it cannot meet the "throughout any 24 month period ending before" condition in paragraph (a) of the definition of "interest in a family farm partnership". There is no requirement in the definition that the interest be held for a given period of time.
2006-021786
XXXXXXXXXX Charles Rafuse
613-957-8967
June 25, 2007
Dear XXXXXXXXXX:
Re: Subsection 110.6(1) - Family Farm Partnership
This is in reply to letter of December 13, 2006, concerning the definition of "interest in a family farm partnership" in subsection 110.6(1) of the Income Tax Act (the "Act").
You describe a situation where a partnership was in existence for a period of at least 24 months and throughout the partnership's period of existence an interest in the partnership meets the definition of "interest in a family partnership" in subsection 110.6(1).
Your query relates to the 24-month period referred to in paragraph (a) of the definition of "interest in a family farm partnership" in subsection 110.6(1). More specifically, you enquire whether an interest that an individual acquires in the mentioned partnership will fail to qualify as an interest in a family partnership under the definition in subsection 110.6(1) only because the individual owned the interest for less than 24 months.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.
To qualify as an "interest in a family farm partnership" as defined in subsection 110.6(1) of the Act, the partnership in which the interest is held must have been in existence for at least 24 months. If the partnership has not been in existence for at least 24 months, it cannot meet the "throughout any 24 month period ending before" condition in paragraph (a) of the definition. There is no requirement in the definition of "interest in a family farm partnership" that the interest be held for a given period of time. Accordingly, in our view, provided a partnership has been in existence for at least 24 months, an interest in such a partnership may qualify as an "interest in a family farm partnership", regardless of the amount of time the interest has been held by the individual, if all the other requirements of the definition are met.
We trust this information is helpful.
Yours truly,
S. Parnanzone
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, 2007
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, 2007
Email this Content