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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Are corporate partners able to claim the deduction under subsection 112(1) of the Act in respect of dividends allocated from a partnership?
Position: Yes
Reasons: Administrative practice.
XXXXXXXXXX 2003-002774
Shaun Harkin, CMA
September 18, 2003
Dear XXXXXXXXXX:
Re: Technical Interpretation Request: Subsection 112(1) deduction
This is in reply to your letter of June 24, 2003 wherein you requested our views on whether a corporate partner may claim the deduction under subsection 112(1) of the Income Tax Act (the "Act") in respect of dividends allocated from a partnership. Our understanding of the situation in which you are concerned is as follows. A partnership is formed under the laws of a province and all the partners are corporations resident in Canada. The partnership owns shares of a Canadian-controlled private corporation ("CCPC"). The CCPC pays a dividend to the partnership, which is then allocated to its partners.
It is our position that, in the circumstances described above, a corporate partner may claim the deduction under subsection 112(1) of the Act with respect to the dividends allocated from the partnership.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
Yours truly,
Daryl Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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