Section 102

Subsection 102(1)

Administrative Policy

26 January 2015 External T.I. 2014-0547501E5 - Certificates of residency and partnerships

certification of Canadian partnership at request of authorized representative

After noting its earlier position at 3 December 2013 TEI Roundtable Q. 9, 2013-0510851C6 that a certificate of residency was not available for a partnership, CRA wrote stating that it was advising of "a change in the certificate of residency process," and stated:

[A[ representative authorized to act…can make a request on behalf of the partners. In such a case, the CRA will certify the residency of all the partners of the partnership, and certify that the partnership is a "Canadian partnership"… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) certification of Canadian partnership at request of authorized representative 81

3 February 1992 T.I. (Tax Window, No. 16, p. 20, ¶1727)

Where there is a two-tier partnership, all the members of the top partnership must be Canadian partners in order for the bottom partnership to be a Canadian partnership.

18 November 1991 Memorandum (Tax Window, No. 11, p. 6, ¶1536)

RC doubted the correctness of an argument that where an interest in a partnership was held by a Canadian resident corporation as bare trustee for a non-resident, the partnership qualified as a Canadian partnership.

Subsection 102(2) - Member of a partnership

Cases

Canada v. Green, 2017 FCA 107

ITA recognizes 2-tier partnerships

Before going on to find that business losses of a lower-tier partnership flowed through an upper-tier partnership without the upper-tier partnership being required to compute income, Webb JA stated:

Any doubt about whether a partnership, which is not a person, would be recognized as a partner of another partnership for the purposes of the ITA has been removed as a result of the provision of subsection 102(2)... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.1) business losses of lower-tier LPs flowed through upper-tier partnership 526
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(e) upper-tier LP not required to compute income and therefore not subject to s. 111(1)(e) 113
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) partnerships not taxpayers for ss. 3 and 111 purposes 39

See Also

Devon Canada Corporation v. The Queen, 2013 TCC 415

source preservation in 2-tier partnership

iIn finding that the income allocated to the taxapyer through two tiers of partnerships continued to be attributable to the underlying resource properties of the second tier partnershp for purposes of s. 66.7(10)(j), Hogan J stated (at para. 45):

In a tiered partnership, the source and location of income is preserved through each level of partnership until the income is ultimately recognized by, and taxed in the hands of, the corporate or individual partners. This is supported by subsection 102(2)... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(10) - Paragraph 66.7(10)(j) drop-down to 2nd tier partnership following deemed successoring 302

Major v. Brodie & Anor, [1998] BTC 141 (Ch. D)

top tier partners are lower tier partnership members

The taxpayers used borrowed money to make a contribution of capital to a partnership (Skeldon Estates) which was a member of a second partnership (Murdoch) which carried on a farming business utilizing farms owned by Skeldon Estate and the second partner of Murdoch.

The Inspector of Taxes failed in a submission that the taxpayers were not eligible for an interest deduction under s. 362(1) of the Income Incorporations Taxes Act 1988 on the ground that the borrowed money contributed to Skeldon Estate was not "used wholly for the purposes of the trade ... carried on by the partnership [i.e., Skeldon Estate]" but, rather, was used for the purposes of the trade carried on by Murdoch. Park J. held (at p. 152) that as "a trade carried on by a partnership is a trade carried on by its members and by each of them" and the borrowed money was "used wholly for the purposes of the trade carried on by W. Murdoch & Son", it followed "that the money [was] thereby used wholly for the purposes of the trade carried on by the partners in W. Murdoch & Son." He went on to indicate (at p. 153) that under English law, where A and B are the partners in partnership X, and X and another person (C) form another partnership, partnership Y, A and B are considered to be partners in partnership Y in their capacity as members of partnership X.

Administrative Policy

91 C.R. - Q.3

Where partnership A, a member of partnership B, does not carry on an active business otherwise than by virtue of partnership B carrying on an active business, RC will not generally deny active income treatment to partnership A solely as a result of the use of a two-tiered partnership.

Articles

Allgood, "Recent Developments in Asset-Backed Securitization", 1993 Conference Report, c. 16

Discussion of custodial arrangements giving unequal interests in choses in action.