1 March 1988 Income Tax Severed Letter 5-5155 - [Sections 25 & 99 of the Income Tax Act]

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.

E. Gillman 613)957-8953

March 1, 1988

Dear Sirs,

Re: Sections 25 & 99 of the Income Tax Act (the "Act")

This is in reply to your letter of November 18, 1987 and following our telephone conversation (Gillman/XXXX) of February 16, 1987 concerning the election of a year-end by an individual who is a member of a partnership after having the partnership elect to rollover all of its assets to a taxable Canadian corporation in virtue of subsection 85(2) of the Act.

As discussed during the above mentioned telephone conversation, the corresponding election to subsection 25(1) of the Act that applies to individuals who are members of a partnership is subsection 99(2) of the Act which only applies in situations where the partnership has ceased to exist.

We further confirm that an election under subsection 99(2) of the Act may be employed when a partnership rolls over its assets into a taxable Canadian corporation subject to subsection 85(2) of the Act. However we are of the opinion that the mere transfer of the partnership business to a corporation whether by way of subsection 85(2) of the Act or otherwise does not in and by itself constitute the partnership from ceasing to exist.

The question as to whether a partnership ceases to exist is determined under the laws of the Province in which the Partnership is formed and the terms of agreement between the partners.

We trust the foregoing will prove helpful.

for Director bilingual Services and Resource Industries Division Rulings Directorate