17 July 2000 External T.I. 2000-0010935 - partner information return

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 Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: What is the time period for assessment of partnership information returns where demand by Minister for the return?

Position: 3 years from the later of (a) the day when the return would have been required to file a return if no Ministerial waiver existed and (b) the day when the return is actually filed (whether voluntarily or pursuant to Ministerial demand)

Reasons: wording of 152(1.4)

						2000-001093
XXXXXXXXXX 								Denise Dalphy
(613) 957-9231
Attention: XXXXXXXXXX 

July 17, 2000

Dear Sirs:

Re: Partnership Information Returns

We are writing in reply to your facsimile transmission dated February 29, 2000 wherein you inquire about the filing of partnership information returns with respect to partnerships with five or fewer members throughout the fiscal year and where no member is a partnership.

Issues

1. "Can the Minister demand at any time from the partner the filing of a partnership information return in respect of a partnership which meets the exemption of paragraph 11 of IC 89-5R?"

2. "Can the Minister then make a determination under section 152(1.4) of the Act based on the date under paragraph 152(1.4)(b) of the Act?"

Our response

1. Yes. Subsection 220(2.1) of the Income Tax Act (the "Act") allows the Minister to waive the requirement (in paragraph 221(1)(d) of the Act and subsection 229(1) of the Income Tax Regulations) for members of certain classes of partnerships to file information returns. Those members who are exempt from filing partnership information returns are described in paragraph 11 of Information Circular 89-5R.

Because this "charging section" [subsection 220(2.1) of the Act] which permits the Minister to make such a waiver continues on to state that "... but the person shall provide the document or information at the Minister's request" [emphasis added], members of partnerships listed in paragraph 11 of IC 89-5R must file such a return if the Minister makes such a request.

2. Yes. Subsection 152(1.4) clearly provides that the Minister may make the determinations described in the postamble of subsection 152(1.4) within 3 years after the later of two days. The first date is the day when the return was required to be filed, or would have been required had the Ministerial waiver provided for in subsection 220(2.1) of the Act and subsection 229(1) of the Regulations not applied. The second date is the day when the return was actually filed. This second date is broadly drafted and would include any date when a return was actually filed, whether on time, late, or at the request of the Minister.

Finally, we have made the following determination with respect to the issue of whether penalties are imposed on the voluntary, but late, filing of partnership information returns:

Issue

If members of a partnership are not required to file partnership returns because the partnership had five or fewer members (none of which was another partnership) throughout a particular fiscal period, but returns are nonetheless filed, albeit at a time that is later than the time when the members would have been required to file had there been a requirement to file, will penalties apply?

Response

No.

Rationale

1. Subsection 162(7.1) of the Income Tax Act (the "Act") is the authority for the imposition of penalties where a member of a partnership fails to file an information return (as a member of a partnership). A penalty is imposed if there is a failure to file "as and when required by this Act or the regulations and (10) does not set out a penalty for failure" [emphasis added].

2. Paragraph 221(1)(d) of the Act authorises the Governor-in-Council to make regulations "requiring any class of persons to make information returns". Subsection 229(1) of the Income Tax Regulations (the "Regulations" prescribes the filing of partnership information returns by members of partnerships.

3. Subsection 220(2.1) of the Act allows the Minister to waive the requirement for a person to file a prescribed form .... or to provide prescribed information, (however, it also provides that the person must provide the documentation if the Minister requests it). The Minister has exercised his authority under this provision and the exemptions from filing are listed in paragraph 11 of Information Circular 89-5R (the "exemptions") and are applicable to the 1992 and subsequent taxation years.

4. Since members of partnerships who meet the criteria in paragraph 11 of IC-89-5R are not required by this Act or the regulations to file information returns, unless a demand to file was been made by the Minister under subsection 220(2.1) of the Act, subsection 162(7.1) will not apply and penalties will not be imposed where a partnership return was not required to be filed, but was filed after the due date that would have been imposed if the exemptions had not applied.

The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Department. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.

Yours truly,

Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate

...cont'd