Section 96

Table of Contents

Cases

Freitas v. Canada, 2018 FCA 110

The taxpayer, a retired Deloitte partner, was assessed by CRA in 2009 to impose a CPP contribution obligation on an amount of income that was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) s. 152(4.2) inapplicable where reassessment, albeit in response to refund request, increased taxpayer’s liability 458
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) a statute-barred reassessment was valid for the purpose of being objected to and vacated on substantive grounds 222
Tax Topics - Other Legislation/Constitution - Federal - Canada Pension Plan - Section 14 s. 96(1.1) income was not from carrying on business 229
Tax Topics - Other Legislation/Constitution - Federal - Canada Pension Plan - Section 38 - Subsection 38(4) - Paragraph 38(4)(a) CRA has discretion to refund excess contributions 99

Raposo v. The Queen, 2018 CCI 81, aff'd 2019 CAF 208

The taxpayer and the three other members of the “Raposo clan” were involved in the sale of cocaine in the Gatineau area. The Crown took the...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 272.1 - Subsection 272.1(5) alleged partnership was void as having an illegal purpose contrary to public policy 153
Tax Topics - General Concepts - Illegality partnership for illegal activity was void under Art. 1417 of the Civil Code 160

Rezek v. Canada, 2005 DTC 5373, 2005 FCA 227

The taxpayer and his spouse engaged in spread transactions under which the taxpayer would purchase a convertible security and short sell the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 150 - Subsection 150(1) - Paragraph 150(1)(d) s. 39(4) elections that were made with late-filed returns were valid as being made "in the taxpayer's return" 146
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) impermissible new theory 45
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property 129
Tax Topics - Income Tax Act - Section 39 - Subsection 39(4) requirement to file election with return is satisfied even if return is late 144
Tax Topics - Statutory Interpretation - Resolving Ambiguity 54

Whealy v. Canada, 2005 DTC 5276, 2005 FCA 190

The Tax Court judge made no palpable and overriding error when he concluded that the taxpayers did not have a view to profit with respect to their...

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Water's Edge Village Estates (Phase II) Ltd. v. Canada, 2002 DTC 7172, 2002 FCA 291

In December 1991 the taxpayers (who were Canadian residents) acquired most of the partnership interests in a partnership ("Klink") that had been...

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Witkin v. Canada, 2002 DTC 7044, 2002 FCA 174

The taxpayer and other Canadian residents acquired a 99% interest in a partnership ("Claridge Holding No. 1") whose sole interest was a 99%...

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McEwen Bros. Ltd. v. The Queen, 99 DTC 5326, [1999] 3 CTC 373 (FCA)

Two arrangements which, in each case, purported to be a partnership between holding corporations controlled by key employees of the taxpayer and a...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Sham deception of Minister 50
Tax Topics - General Concepts - Tax Avoidance deception of Minister 50

Sunshine Uniform Supply (1983) Ltd. v. The Queen, 2000 DTC 6127 (FCTD)

A purported partnership ("Anwin") of which the taxpayer was a limited partner entered into a joint venture agreement with a corporation...

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Backman v. Canada, 2001 DTC 5149, 2001 SCC 10, [2001] 1 S.C.R. 367

The taxpayer and other Canadian residents purchased all of the partnership interests of Americans in a Texas limited partnership ("Commons")...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Purpose/Intention motivation v. purpose 65
Tax Topics - General Concepts - Tax Avoidance 87
Tax Topics - Statutory Interpretation - Provincial Law foreign "partnership" must have the attributes of a Cdn partnership 153

Spire Freezers Ltd. v. Canada, 2001 DTC 6158, [2001] 1 S.C.R. 391, 2001 SCC 11

A California partnership ("HCP") owned by a U.S. subsidiary of Bell Canada Enterprises ("BDI") and a subsidiary of BDI had expended substantial...

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Continental Bank Leasing Corp. v. Canada, 98 DTC 6505, [1998] 2 S.C.R. 298, [1998] 4 CTC 119

After the cancellation of an agreement for the sale of the shares of the taxpayer by its parent ("Continental Bank") to a third party ("Central...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Illegality statutory statement that illegal act not invalid 189
Tax Topics - General Concepts - Substance question of constructing the genuinely-reflective documents 204

Bow River Pipe Lines Ltd. v. Canada, 97 DTC 5385 (FCA)

A wholly-owned subsidiary ("Lone Rock") of the taxpayer held a 99.9% limited partnership interest in a partnership between Lone Rock and a...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Illegality assignment of partnership interest invalid where assignee not admitted 195
Tax Topics - General Concepts - Transitional Provisions and Policies 64

Schultz v. The Queen, 95 DTC 5657, [1996] 2 CTC 127 (FCA)

The taxpayers (a husband and wife) were in partnership when they entered into coordinated hedging transactions in which the husband would be long...

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Kuchirka v. The Queen, 91 DTC 5156 (FCTD)

Before going on to find that a farmer and his wife were not a partnership in light of the fact that the property and the bank accounts were not...

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Levy v. The Queen, 90 DTC 6346, [1990] 2 CTC 83 (FCTD)

Four investors agreed to enter into a "syndicate" in which one of the investors would be entrusted with the care, training and maintenance of...

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Graves v. The Queen, 90 DTC 6300 (FCTD)

A husband and wife team of Amway distributors was found to be a partnership (rather than a sole proprietorship carried on by the husband) in light...

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Laxton v. The Queen, 89 DTC 5327, [1989] 2 CTC 85 (FCA)

In finding that an arrangement styled as a real estate joint venture was not a partnership, and instead was a joint venture that "was a voluntary...

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Words and Phrases
joint venture
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 119

The Queen v. CFTO TV Ltd., 82 DTC 6139, [1982] CTC 147 (FCTD)

It may be that the existence of partnership is negated where the alleged partner does not share in partnership losses. However, a partnership...

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Cornforth v. The Queen, 82 DTC 6058, [1982] CTC 45 (FCTD)

A partnership was found not to exist between two physiotherapists who were husband and wife in light of such non-determinative factors as the...

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Sandhu v. The Queen, 80 DTC 6097, [1980] CTC 158 (FCTD)

"Where there has been a contribution of capital and a complete sharing of profit and losses [as was found to be the case here], there would have...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 46
Tax Topics - Income Tax Act - Section 2 - Subsection 2(3) - Paragraph 2(3)(b) partner carries on partnership business 19

Lane v. The Queen, 78 DTC 6535, [1978] CTC 795 (FCTD), aff'd 86 DTC 6568, [1986] 2 CTC (FCA)

A "syndicate" formed for the purpose of acquiring lands and managing the apartments on them, was a partnership.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 disposition of partnership interest not disposition of underlying property 61
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Partnership Interests partnership interest distinct from partnership property 61

The Queen v. de Loppinot, 78 DTC 6477, [1978] CTC 705 (FCTD)

An agreement between a retiring chartered accountant ("Peloquin") and a firm of chartered accountants - wherein the firm agreed to pay Peloquin...

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Ablan Leon (1964) Ltd. v. MNR, 76 DTC 6280, [1976] CTC 506 (FCA)

Ryan, J. indicated in obiter dicta that it is not clear whether the same persons who are trustees of several trusts can contract with themselves...

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Kingsdale Securities Co. Ltd. v. The Queen, 74 DTC 6674, [1975] CTC 10 (FCA)

Urie, J. indicated that trusts per se are not legal persons and cannot become partners.

Northern Sales (1963) Ltd. v. MNR, 73 DTC 5200, [1973] CTC 239 (FCTD)

A marketing arrangement among the taxpayer and two other companies for the 1960-61 crop year, under which the companies would operate...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange incurred in trading operation 29

MNR v. Strauss, 60 DTC 1060, [1960] CTC 86 (Ex Ct)

The taxpayer, and several other individuals, who purchased land for sale in a housing development were found to have acquired the land in...

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See Also

Ingenious Games LLP & Ors v Revenue and Customs, [2021] EWCA Civ 1180

Each appellant LLP (subject to some variation in the case of an LLP that focused on video games rather than films) had entered into agreements...

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Words and Phrases
with a view to profit profit

Commissioner of State Revenue v Rojoda Pty Ltd , [2020] HCA 7

The High Court considered (at para. 21) it to be “orthodox” and correct law that “the interest of partners in relation to partnership assets...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) a partner or former partner of a partnership does not have a fixed interest in its assets prior to winding-up 609

Canada v. Raposo, 2019 CAF 208

Before going on to find that an alleged partnership was void under the Civil Code as its object was an unlawful activity (trafficking in cocaine),...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Illegality voidness of a partnership with an unlawful activity in Quebec applied for ETA purposes 485
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 presumption of complementarity in s. 8.1 must be overridden by expansive wording in the ETA provision in question 296
Tax Topics - Excise Tax Act - Section 272.1 - Subsection 272.1(5) s. 272.1(5) did not apply to debt of a partnership that was void for carrying on an illicit activity 332

Samarkand Film Partnership No. 3 & Ors v Revenue and Customs, [2017] EWCA Civ 77

Arden LJ followed Eclipse in finding that a film tax shelter partnership was not carrying on a trade given that the film it acquired was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business non-trading business 381
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) rent received qua landlord rather than partner 143

D Marks Partnership by its General Partner Quintaste Pty Ltd v Commissioner of Taxation, [2016] FCAFC 86

At issue was whether the appellant was a limited partnership for Australian income tax purposes, so that it was entitled to imputation credits for...

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Bank of Beirut SAL v Prince Adel El-Hashemite , [2016] Ch 1, [2015] EWHC 1451

A bank claimed that Prince Adel El-Hashemite had falsely registered a limited partnership with the Registrar of Companies and had used the...

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Otteson v. The Queen, 2014 DTC 1173 [at 3637], 2014 TCC 250

The taxpayers, spouses, bought a farm in 2003 to start a tree farming business. Hogan found that the farm was owned by the taxpayers rather than...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Farm or Fishing Property portion of loss-generating tree farm rented to third party 427

McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39, [2014] 2 S.C.R. 108

The appellant was an equity partner at the respondent law firm, whose partnership agreement required retirement at 65. The respondent applied to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) equity partner not an employee under (human rights) control and dependency test 172

Garber v. The Queen, 2014 DTC 1045 [at 2812], 2014 TCC 1

Each appellant (along with 600 other taxpayers over several taxation years in the 1980's) bought units in a limited partnership. Each of the 36...

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Clyde & Co LLP & Anor v Bates Van Winkelhof , [2012] EWCA Civ 1207

The claimant, who was a solicitor practising as an equity member of a limited liability partnership, and who was expelled as a member, was found...

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delaSalle v. The Queen, 2012 DTC 1225 [at 3626], 2012 TCC 278 (Informal Procedure)

The taxpayer incorporated their business but continued to pay personally for expenses incurred in the business, and claimed a business loss on her...

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9098-9005 Quebec Inc. v. The Queen, 2012 DTC 1284 [at 3864], 2012 TCC 324

An individual who managed a partnership for a fixed fee "through" a corporation of which he was the sole officer and shareholder would have been...

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Duivenvoorde v. The Queen, 2012 DTC 1006 [at 2531], 2011 TCC 525 (Informal Procedure)

Jorré found that the taxpayer and her husband were carrying out their garden centre business in equal partnership. He stated (at paras....

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Big Bad Voodoo Daddy v. The Queen, 2011 DTC 1173 [at 955], 2011 TCC 226 (Informal Procedure)

The taxpayer was a U.S. limited liability corporation (LLC) which performed jazz concerts in Canada. A CRA appeals officer stated in his...

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Teelucksingh v. The Queen, 2011 DTC 1052 [at 272], 2011 TCC 22

In connection with a limited partnership offering whose final closing was on December 31, 1993, the taxpayer bought units in the partnership for...

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Blais v. The Queen, 2011 DTC 1008 [at 55], 2010 TCC 195 (Informal Procedure)

In finding that the Minister properly disallowed the deduction of a $5,000 salary paid by a husband and wife partnership to the husband in...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 122

O'Dea v. The Queen, 2009 DTC 912, 2009 TCC 295

A partnership in which the taxpayers invested was found (at para. 105) not to be a valid partnership under s. 96 as "the transactions were...

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177795 Canada Inc. c. La Reine, 2008 DTC 3771, 2007 TCC 569

The taxpayer, whose principal place of business was in Quebec and who purchased interests in a Texas partnership shortly after the sale of the...

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Saint-Laurent v. The Queen, 2008 DTC 3668 (TCC)

The taxpayer did absolutely nothing to familiarize himself with his partners in a purported Quebec partnership, the financial quality of his...

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Maslanka c. La Reine, 2006 DTC 2560, 2004 TCC 158 (Informal Procedure)

In finding that investors who sought to deduct investment tax credits for expenditures on scientific research and experimental development were...

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M. Young Legal Associates Ltd v. Zahid Solicitors (a firm) and Others, [2006] EWCA Civ 613

A retired solicitor who was asked to become a partner solely for the purpose of meeting the requirements of the Solicitors' Practice Rules 1990...

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Bains v. The Queen, [2005] G.S.T.C. 178, 2005 FCA 378

A rental property of a husband and wife found to be held in co-ownership rather than in partnership for ETA purposes given that there was no...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 148 - Subsection 148(1) co-owners not partners 81

Geddes Contracting co. Ltd. v. The Queen, 2005 DTC 92, 2005 TCC 6, briefly aff'd 2006 DTC 6092, 2006 FCA 48

The predecessor of the corporate taxpayer and other Canadian purchasers of a general interest in a New Mexico partnership that subsequently sold...

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Whealy v. The Queen, 2004 DTC 2888, 2004 TCC 377

The original partners in a Texas partnership (the "Old Partnership") formed a second Texas partnership (the "New Partnership"), the Old...

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Ouellet c. La Reine, 2004 DTC 2706, 2004 TCC 308 (Informal Procedure)

The taxpayer and other investors in a supposed partnership were found not to be partners given that there was no manifestation of any intention to...

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Morley v. The Queen, 2004 DTC 2604, 2004 TCC 280, briefly aff'd 2006 DTC 6351, 2006 FCA 171

In finding that a partnership had been formed notwithstanding that it never made any sales of its software, Archambault J. noted that a...

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Makaruk v. The Queen, 2003 DTC 1011 (TCC)

In finding that a husband and wife carried on a business involving the buying and selling of automobiles as a partnership, Campbell T.C.J. noted...

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Labbett v. The Queen, docket 1999-4006 (TCC)

The taxpayer and five other individuals made a decision to form a partnership ("Fairway") to purchase units in a limited partnership ("Pinecrest")...

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Duncan v. The Queen, 2001 DTC 96 (TCC)

On December 13, 1991 some Canadian promoters acquired a 98% interest in a U.S. partnership ("Klink") that has been carrying on a business of...

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Memec plc v. IRC, [1998] BTC 251, [1998] EWCA Civ 941 (CA)

In order to minimize German corporate tax payable by its German subsidiary ("GmbH"), the taxpayer, which was a UK company, formed a silent...

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Witkin v. The Queen, 98 DTC 1933, [1998] 3 CTC 2869 (TCC)

The taxpayers and other Canadians purchased a 99% interest in a partnership ("CL 1") which, in turn, owned a 99% interest in a Texas gen(at CL A...

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Grocott v. The Queen, 95 DTC 1025 (TCC)

In obiter dicta, Bowman TCJ. indicated that his decision - that the taxpayer, by virtue of being a limited partner in an Ontario limited...

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Kenneth W. Mahon v. Minister of National Revenue, 91 DTC 878, [1991] 1 CTC 2543 (TCC)

At the end of 1981 the taxpayer was a partner in a real estate partnership units of which he had subscribed for on December 28, 1981,...

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MacKinlay v. Arthur Young McClelland Moores & Co., [1989] S.TC 898 (HL)

In discussing the nature of a partnership, Lord Oliver stated (p. 900):

A partner working in the business or undertaking of the partnership is in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) "salary" to partner is a profits distribution 82

Blackpool Marton Rotary Club v. Martin, [1988] BTC 442 (Ch.D.)

A club, which had adopted the standard constitution prescribed by Rotary International, was not a partnership because members were only entitled...

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Marigold Holdings Ltd. v. Norem Construction Ltd., [1988] 5 WWR 710 (Alta. Q.B.)

A general partner who received a fee for managing the partnership but no share of the profits was a partner. "The Partnership Act does not require...

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Volzke Construction Ltd. v. Westlock Foods Ltd., [1986] 4 WWR 668 (Alta. C.A.)

The defendant, which signed an agreement for the acquisition of an undivided 20% interest in a shopping centre, was held to be a partner of the...

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Canadian Pacific Ltd. v. Telesat Canada (1982), 133 DLR (3d) 321 (Ont CA)

An agreement between Telesat Canada and the nine principal Canadian telephone companies setting up the Trans-Canada Telephone System did not...

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Mathewson v. MNR, 63 DTC 490 (TAB)

A New York private company whose two shareholders (including the taxpayer, who was a U.S. citizen resident in Canada) had elected under subchapter...

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Newstead v. Frost, [1980] A.C. 562, 53 TC 525 (HL)

Although it may be that there cannot be a partnership between an individual and a corporation to entertain on television (since a corporation...

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Porter v. Armstrong, [1926] 2 DLR 340, [1926] S.C.R. 328

The assumption of both co-owners of a real estate property that the second co-owner was free to assign his interest in the property to a third...

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Administrative Policy

27 October 2020 CTF Roundtable Q. 9, 2020-0866671C6 - entity classification of UK LLP

CRA indicated that, under its two-step approach, a UK LLP is a corporation rather than a partnership given that:

  • A UK LLP has a legal existence...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation a UK LLP is a corporation in light of its separate legal personality and sole responsibility for debts and conduct of business 198

T4068(E) Guide for the Partnership Information Return (T5013 Forms)

Partner wages are non-deductible

Reconciling the partnership's net income or loss for income tax purposes

... Salary or wages paid to partners are...

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1 August 2019 External T.I. 2018-0768561E5 - Application Administrative Position on US LLPs & LLLP

Two Florida or Delaware LLLPs (held by Canadian resident corporations) that have filed as partnerships for Canadian tax purposes since the time of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation LLLPs cannot be viewed as corporations solely on a prospective basis 193

2017 Ruling 2015-0605161R3 - Fonds commun de placement (FCP) - Luxembourg

Foreign pension funds invested in particular securities’ portfolios including, in some cases, Canadian securities through acquiring “units”...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) a Luxembourg FCP was a co-ownership arrangement 451

27 March 2018 Internal T.I. 2015-0592551I7 - Excluded property status of partnership interest

The Directorate accepted the TSO view that an Icelandic “Sameignarfelag” was as a partnership, stating:

As indicated in Income Tax News No....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property partnership interests no longer were excluded property on dissolution given prior disposition of s. 95(2)(a)(ii) loans 551
Tax Topics - Income Tax Regulations - Regulation 5908 - Subsection 5908(10) partnership interests no longer were excluded property on dissolution given prior disposition of s. 95(2)(a)(ii) loans/potential qualification of partnership interest under para. (c) ignored 297
Tax Topics - Income Tax Regulations - Regulation 5903 - Subsection 5903(5) - Paragraph 5903(5)(b) foreign affiliate parent cannot carry back FAPLs generated by wound-up foreign affiliate 389
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(f.14) once partnership interests were no longer excluded property, the components of their ACB calculation was to be translated at the rates when those components first arose 254
Tax Topics - Income Tax Act - Section 98 - Subsection 98(2) partnership interest disposition occurred no sooner than final distribution date 79

16 May 2018 IFA Roundtable Q. 8, 2018-0749481C6 - Update on Entity Classification

CRA essentially repeated the points made in the 21 July 2017 Email of the CRA Delaware/Florida Working Group respecting grandfathering of existing...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation French société en commandite simple (SECS) a corp 40

2016 Ruling 2015-0606141R3 - XXXXXXXXXX

Investors subscribe for units of “Subfunds” of an “Umbrella” fund, both situated in and governed by the laws of a redacted non-resident...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) a foreign common contractual fund is a co-ownership arrangement rather than a unit trust 464

Excise and GST/HST News No. 103, December 2017

After listing general guidelines that might assist in distinguishing joint ventures and partnerships in the common law provinces, CRA stated:

The...

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21 July 2017 External T.I. - General answer for Delaware/Florida Working Group Submissions / Questions

At the 2017 IFA Roundtable, CRA announced that it will allow Delaware & Florida LLPs and LLLPs formed before April 26, 2017 to continue filing as...

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Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation CRA elaborates on its grandfathering of LLPs and LLLPs 208

13 February 2017 Internal T.I. 2015-0568011I7 - Classification of Florida LLLP

An LP governed by provincial law and with Canadian-resident members, invested as a limited partner in two LLLPs governed (“Florida-LLLP-1” and...

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Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Florida LLLPs found to be corporations 74

13 February 2017 Internal T.I. 2015-0587691I7 - Classification of a Delaware LLLP

Two related taxable Canadian corporations (CanGP and CanLP) were the general and limited partner, respectively, of a Limited Liability Limited...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation de facto listing of relevant corporate-like attributes of LLLP 106

26 April 2017 IFA Roundtable Q. 3, 2017-0691131C6 - U.S. LLPs and LLLPs

Are there further developments on CRA’s policies respecting its view of Florida and Delaware LLPs and LLLPs as corporations? CRA indicated that...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation general grandfathering of pre-April 26, 2017 LLPs and LLLPs 115
Tax Topics - Treaties - Income Tax Conventions - Article 4 Florida and Delaware LLPs and LLLPs treated like LLCs 28
Tax Topics - Income Tax Act - Section 93.2 - Subsection 93.2(2) Florida and Delaware LLPs and LLLPs subject to s. 93.2 23

25 February 2016 CBA Roundtable, Q. 7

A group of professionals (e.g., dentists), each operating as sole proprietors, hire common staff members (e.g., receptionists, file clerks, etc.) ...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency dentist handles source deductions and payroll as agent for colleagues 127
Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a) joint responsibility of joint employers 434
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Service dentists jointly employ staff so as to avoid GST 296
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Taxable Supply dentists jointly employ staff so as to avoid GST 203

29 November 2016 CTF Roundtable Q. 10, 2016-0669751C6 - U.S. LLPs and LLLPs

Certain U.S.-based Florida and Delaware LLPs and LLLPs, with many partners, which carry on business in Canada, are unable to qualify for relief,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation potential prospective filings of LLPs/LLLPs as corps 66

1 December 2015 Internal T.I. 2015-0588381I7 F - Classification of US-LLCs

A taxpayer’s representative submitted that Delaware, New York and Florida LLCs of which the taxpayer was a member should be treated as...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation status of Delaware, NY and Florida LLCs as corps not affected by Quebec residence of member 335
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 8.1 effected no change/2 step-approach should be inter-provincial 277

21 June 2016 Internal T.I. 2015-0581151I7 - Dutch Co-Op Entity Classification

CRA briefly concluded (after referencing its two-step approach to foreign entity classification) that a Dutch Co-op was a corporation rather than...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Dutch co-op a corporation 74
Tax Topics - General Concepts - Foreign Law two-step approach applied to finding Dutch co-op a corporation 103

10 June 2016 STEP Roundtable Q. 8, 2016-0634951C6 - U.S. LLPs & LLLPs Classification

At 2016 IFA Roundtable, Q. 1, CRA indicated it had finalized its view that Florida and Delaware limited liability partnerships and limited...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation perhaps potential flexibility in applying the transition of LLPs from partnerships to corporations 84

26 May 2016 IFA Roundtable Q. 1, 2016-0642051C6 - Classification of U.S. LLPs & LLLPs

In concluding that limited liability partnerships (“LLPs”) and limited liability limited partnerships (“LLLPs”) governed by the laws of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Delaware and Florida LLPs and LLLPs as corporations 161

28 May 2015 IFA Roundtable Q. 3, 2015-0581511C6 - IFA 2015 Q.3: Entity Classification

Does CRA still follows the "two-step" approach to entity classification, and what new entities are being considered?

After noting the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Florida LLLPs potentially corporations 106

S4-F16-C1 - What is a Partnership?

Application of Canadian partnership law to partnership characterization

1.2 In Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298, 98...

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16 June 2014 STEP Roundtable, 2014-0523041C6 - LLLPs

How would a U.S. limited liability limited partnership ("LLLP") be characterized, e.g., one where the governing law does not require there to be a...

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2014 Ruling 2013-0496831R3 - Irish Common Contractual Fund

An Irish common contractual fund, which gave the unitholders proportionate undivided co-ownership interests as tenants in common in the property...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) Irish contractual fund respected as co-ownership 424

5 December 2012 Internal T.I. 2012-0439301I7 F - Reassessment beyond the normal reassessment period

Canco made a loan to a partnership (governed by the laws of a province) between two non-resident corporations with which Canco does not deal at...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(b) - Subparagraph 152(4)(b)(iii) s. 17 assessment of loan made by Canco to non-resident LP was re a transaction with the non-resident partners for s. 152(4)(a)(iii) purposes 306

2010 Ruling 2010-0357061R3 - Split-up butterfly

After describing the distribution of property by the distributing corporation (DC) to three transferee corporations (TC1, TC2 and TC3) under a...

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7 October 2011 Roundtable, 2011-0411911C6 F - Exploitation entreprise par SP

Article 2186 of the CCQ defines a contract of partnership as "a contract by which the parties, in a spirit of cooperation, agree to carry on an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 2601 - Subsection 2601(1) property income of partnership is taxable only to partner (as to its share) in its province of residence 178

7 September 2010 Internal T.I. 2010-0372191I7 F - Société de personnes - partage d'une perte

A general partnership (SENC), which was generating losses, paid an amount in the year to one of the three equal partners (an individual). The...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(g) “salary” paid to partner was non-deductible and was a capital draw given partnership loss 131

8 January 2010 External T.I. 2009-0349721E5 F - Crédit d'impôt pour la rénovation domiciliaire

CRA noted that a residence held by a partnership could qualify as an "eligible dwelling" for home renovation tax credit purposes of the individual...

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Tax Topics - Income Tax Act - Section 118.04 - Subsection 118.04(1) - Eligible Dwelling - Paragraph (a) partner incurring renovation expenses while occupying partnership residence can claim HRTC 97

15 April 2008 Internal T.I. 2008-0266251I7 - Liechtenstein foundation

The initial concern as to the status of an entity governed by the DRUPA comes from the fact that an entity governed by this legislation is a...

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27 June 2008 External T.I. 2007-0247551E5 - FAPI and Part XIII Tax

If FP is formed under the Delaware Revised Uniform Partnership Act ("DRUPA"), it as been the long-standing position of...CRA...that a partnership...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 5900 - Subsection 5900(3) partnership between 2 CFAs was a Cdn-resident person for s. 91(5) purposes 68
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Property Income - A - Paragraph (b) FA dividends received by NR partnership between 2 CFAs (FP) not excluded from FAPI, but deduction under s. 91(5)/Reg. 5900(3) to FP 298
Tax Topics - Income Tax Act - Section 92 - Subsection 92(1) - Paragraph 92(1)(a) double ACB recognition of FAPI at partnership level and at level of Canco shareholder of CFA partners 227
Tax Topics - Income Tax Act - Section 91 - Subsection 91(5) s. 91(5) deduction eliminated net FAPI inclusion to CFA members of foreign partnership receiving foreign dividends from partnership subsidiary 107

19 January 2007 Internal T.I. 2006-0216451I7 F - Fondation privée investissant dans une S.P.

In the context of whether a private foundation could have its registration revoked for carrying on business through a foreign partnership that was...

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Tax Topics - Income Tax Act - Section 149.1 - Subsection 149.1(4) - Paragraph 149.1(4)(a) foundation’s registration subject to revocation because it had invested in a Delaware partnership (with stated separate existence) carrying on business 103

Income Tax Technical News, No. 34, 27 April 2006 under "Delaware Revised Uniform Partnership Act"

Partnerships formed under the DRUPA or DRULPA normally would be considered to be partnerships for purposes of the Act.

Policy Statement P-171R "Distinguishing Between a Joint Venture and a Partnership for Purposes of the Section 273 Joint Venture Election".

To determine whether a particular relationship is a joint venture or a partnership, the circumstances of the relationship should be reviewed to...

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9 January 2004 External T.I. 2003-003742

A farming partnership between a husband and wife transfers its business to a newly-incorporated corporation ("Opco") whose common shares are held...

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25 November 2004 External T.I. 2004-0079751E5 F - Dépenses d'une auberge limitées par 18(12)

After finding that s. 18(12) would apply to the joint owners (Messrs. A and B) of an inn whose wives operate it, with Messrs. A and B staying with...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(12) s. 18(12) would apply to the joint owners of an inn whose wives operate it, with them staying with them on weekends/ no avoidance if partnership interposed 285

17 March 2003 External T.I. 2001-0095675 - Unit Trust investing in a limited partnership

Where a loan was made to the limited partnership that qualified as a security for purposes of s. 108(2)(b)(v), CCRA would both require that the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(2) - Paragraph 108(2)(b) partnership look-through 213

14 December 2000 Internal T.I. 2000-0059387 - Partnership

Description of various clauses that establish that an agreement was a partnership agreement.

21 December 2000 External T.I. 2000-0062015 - Delaware Revised Uniform Partnership Act

Entities that have been set out for non-profit purposes under the Delaware Revised Uniform Partnership Act would not satisfy the common law...

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28 November 2000 External T.I. 2000-0057765 - Delaware Revised Uniform Partnership Act

"The attributes of an entity formed under the [Delaware Revised Uniform Partnership Act] more closely resemble those of a Canadian general...

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30 November 1996 Ruling 9702653 - PARTITIONING SHARES HELD BY PARTNERSHIP

RC would appear to accept that a partnership that had filed for many years as a partnership and that held some units of another partnership (in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition no disposition on partition of shares 50

25 October 1994 External T.I. 9419255 - PARTNERSHIP OR CORPORATION

A German offene Handelsgesellschaft ("OHG"), as described by the writer, would be considered a partnership for Canadian tax purposes.

8 September 1994 Internal T.I. 9420937 - HUSBAND & WIFE PARTNERSHIP

Before discussing the case law in the context of a dispute, RC stated that "in general, an acceptable partnership requires an investment by each...

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23 November 1992 T.I. 922181 (September 1993 Access Letter, p. 417, ¶C96-044)

A société en nom collectif formed under the laws of France will be a partnership for purposes of the Act even though it has elected to be taxed...

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September 1991 Memorandum (Tax Window, No. 10, p. 12, ¶1478)

Most syndicates and other co-ownership arrangements are partnerships.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.1) 9

90 C.P.T.J. - Q.6

A disclaimer of partnership in a joint venture agreement is not determinative of the nature of the business organization.

88 C.R. - Q.15

In RC's experience, many so-called "joint ventures" are, in fact, partnerships.

Articles

Tina Korovilas, Drew Morier, "Non-Corporate Vehicles in the Foreign Affiliate Context", 2018 Conference Report (Canadian Tax Foundation), 20:1 – 114

Substantive attributes of a partnership (p. 20:6)

[T]he court’s reasoning in Memec supports an approach to entity classification for tax...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) 111
Tax Topics - General Concepts - Ownership 245
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(11.2) - Paragraph 5907(11.2)(b) 181
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) 99
Tax Topics - Income Tax Act - Section 93.1 - Subsection 93.1(2) - Paragraph 93.1(2)(a) 120
Tax Topics - Income Tax Act - Section 93.1 - Subsection 93.1(2) - Paragraph 93.1(2)(d) - Subparagraph 93.1(2)(d)(i) 80
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) 91
Tax Topics - Income Tax Act - Section 93 - Subsection 93(1.3) 168
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (e) 155
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (a) 368
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property - Paragraph (c) 290
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(y) 64
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph. 95(2)(z) 332
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) - Subclause 95(2)(a)(ii)(B)(II) 169
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(D) 688
Tax Topics - Income Tax Act - Section 94 - Subsection 94(1) - Exempt Foreign Trust - Paragraph (h) - Subparagraph (h)(ii) - Clause (h)(ii)(C) 615

Angelo Discepola, Robert Nearing, "A Reply to the CRA's Classification of Florida and Delaware LLLPs and LLPs as Corporations", 2016 Conference Report (Canadian Tax Foundation), 24:1-39

General characteristics of LLPs (p. 24:13)

In broad terms, LLPs are fundamentally general partnerships and defined as such under LLP legislation....

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Michael N. Kandev, Sandra Slaats, "Recent Developments in the Foreign Affiliate Area", 2015 Annual CTF Conference paper

CRA position on partnerships under the Delaware Revised Uniform Partnership Act (p. 31:5)

Effectively, the CRA concluded [in] ITTN No. 20, June...

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Joel Nitikman, "Is an LLP a Corporation for Canadian Tax Purposes? A Reply to the CRA", Tax Topics (Wolters Kluwer), No. 2313, July 7, 2016, p.1.

Partnership and corporation based on contract and statute, respectively (p. 4)

There is a fundamental aspect of corporations that partnerships do...

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Allan Lanthier, "Limited Liability Partnerships", Canadian Tax Highlights, Vol. 24, No. 6, June 2016, p. 10.

Partial v. full shield LLPs (p. 10)

[A]n LLP may be a partial shield or a full shield. In a partial-shield jurisdiction, a partner is protected...

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Roy A. Berg, "CRA Classifies US LLLPs and LLPs as Corporations", Canadian Tax Highlights, Vol. 24, No. 6, June 2016, p. 9

LLLPs and LLPs similar to LPs except for GP limited liability (p. 9)

Statutes of 26 US states allow for the formation of LLLPs, and nearly all...

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Justice Marshall Rothstein, "An Overview of the Supreme Court of Canada", Bulletin for International Taxation (IBFD), January/February 2016, p. 20.

Characterization of foreign entities (p. 25)

This endorsement of a foreign court's definition of a taxation law concept contrasts with Canadian...

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Kenneth Snider, "US Limited Liability Partnerships – DRUPA Revisited", International Tax (Wolters Kluwer CCH), Number 77, August 2014, p. 4.

Two-step approach for determining whether an LLLP is a partnership (p. 6)

…CRA [in 2014-0523041C6, declining to conclude that an LLLP is a...

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Michelle Moriartey, "The Thin Blue Line Between Expressions of Interest and True Partnerships", Tax Topics, 19 March, 2009, No. 1932, p. 1: Discussion of Blue Line Hockey Acquisitionco, Inc. v. Orca Bay Hockey Limited Partnership, 2009 BCCA 34

Roderick I’Anson Banks, "Chapter 5: Rules for Ascertaining the Existence of a Partnership", Lindley & Banks on Partnership, (Sweet & Maxwell, 19th Ed.) 2010

Distinction between employee and partner/fixed distribution entitlement (5-20)

[I]gnoring for the present section 2(3)(b) [the same as...

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Jessica Fabbro, "What is an LLC?", CCH Tax Topics, No. 2067, 20 October 2011, p.1: discussion of HMRC v. Anson, [2011] UKUT B21 (TCC) (reversing the finding in Swift v. HMRCI, [2010] UKFTT 88 (TC) that a US LLC was closer to a Scottish partnership than a UK company).

Jessica Fabbro, "Oh Say Can You (LL)C? A Case Comment on Boliden Westmin Ltd. v. British Columbia", CCH Tax Topics, No. 1836, 17 May 2007, p. 1: discussion of finding in that case that a Nevada LLC most closely resembled a corporation.

Bill Maclagan, "Partnerships: An Update", 2005 Conference Report, c. 37.

John R. Owen, "Foreign Entity Classification and the Character of Foreign Distributions", 2005 Conference Report, c. 20: Contrast between the characteristics of a corporation and a partnership in Canadian law.

Barry Horne, "Meaning of Partnership - and Update on the Necessary Ingredients", Resource Sector Taxation, Vol. III, No. 2, p. 186.

Paul Tamaki, "The Use of Partnerships in Tax-Motivated Transactions", Business Vehicles, Vol. VII, No. 3, 2001, p. 352.

Jack Bernstein, "Transparencies - A Canadian Perspective", Tax Notes International, Vol. 22, No. 13, 26 March 2001, p. 1569.

Jack Bernstein, "Multi-National Corporate Joint Ventures and Partnerships", Tax Profile, Vol. 6, No. 13, January 2001, p. 145.

Patrick Marley, "Characterization of Delaware Partnerships", Canadian Current Tax, Vol. 10, No. 8, May 2000, p. 65.

Alex Easson, "Taxation of Partnerships in Canada", Bolton for International Fiscal Documentation, Vol. 54, No. 4, April 2000, p. 157.

Wolfe D. Goodman, "American Family Limited Partnerships as an Estate Planning Tool?", Goodman on Estate Planning, Vol. VI, No. 3, 1997, p. 447: "In the 1970s Revenue Canada expressed the view that managing investments does not amount to carrying on a business, which is, of course, an essential element in the definition of a partnership. It based this view in part on two Exchequer Court decisions ... ."

Bernstein, "Is a Partnership a Separate Entity?", Tax Profile, Vol. 5, No. 9, May 1997, p. 99.

Joel A. Nitikman, "Understanding the Nature of Limited Partnerships", Business Vehicles, Vol. III, No. 1, 1996, p. 117.

Knowlton, "Real Estate Investment by Canadian Pension Funds", 1995 Corporate Management Tax Conference Report, c. 12: Includes a discussion of the two-tier structure.

Yaksich, "Essential Partnership Law and Related Issues Affecting the Use of Partnerships in Tax Planning", 1994 Corporate Management Tax Conference Report, c. 9.

Silver, "Vehicles for Acquiring and Holding Real Estate", 1989 Corporate Management Tax Conference Report, pp. 4:4-4:7: Discussion of distinction between partnership and co-ownership arrangement.

McKee, "The Distinction Between Joint Ventures and Partnerships", Canadian Current Tax, May 1985, p. C89: Cited in Woodlin Developments Ltd. v. MNR, 86 DTC 1116 (TCC) and in Laxton v. The Queen, 89 DTC 5327 (FCA).

Birnie, "Partnership, Syndicate and Joint Venture: What's the Difference?", 1981 Conference Report, p. 182.

Kellough, "The Business of Defining a Partnership under the Income Tax Act", 1974 Canadian Tax Journal, p. 190.

Subsection 96(1) - General Rules

Paragraph 96(1)(a)

Cases

Canada v. Robinson, 98 DTC 6232 (FCA)

18 doctors practising as a partnership acquired new premises in which the partnership would carry on the its practice as tenant of the doctors in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense payments made from co-owners to partnership of same individuals were non-deductible payments to themselves 165

Norco Development Ltd. v. The Queen, 85 DTC 5213, [1985] 1 CTC 130 (FCTD)

The taxpayer was an equal partner with two associated corporations in a partnership (Noort Developments) which was engaged in an active business....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 129 - Subsection 129(6) s. 129(6) applied to interest paid by active business partnership to related partner 192

See Also

Samarkand Film Partnership No. 3 & Ors v Revenue and Customs, [2017] EWCA Civ 77

In rejecting an argument that the determination of whether a partnership carried on a trade should take into account financing activities at the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 whether partnership exists while only preliminary partners 217
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business non-trading business 381

MacKinlay v. Arthur Young McClelland Moores & Co., [1989] BTC 587 (HL)

Lord Oliver rejected a finding of the Court of Appeal that a firm of accountants could be regarded as a "notionally distinct entity" in order to...

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Administrative Policy

17 May 2022 External T.I. 2021-0884651E5 - Cost Recovery Method in IT-426R (Archived)

A limited partnership with both resident and non-resident partners, but with its central management and control in Canada (so that it was a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) a limited partnership selling shares on an earnout basis cannot utilize the cost-recovery method 383
Tax Topics - Income Tax Regulations - Regulation 229 - Subsection 229(1) T5013 return is not a return of income 128
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Canadian Resident Partnership “Canadian resident partnership” is not a person “resident in Canada” 143

29 January 2018 External T.I. 2017-0702731E5 - Patronage dividends and partnerships

Can a cooperative corporation, that is a member of a limited partnership, deduct patronage dividends computed on the basis of sales made by the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 135 - Subsection 135(4) - Customer a partnership is not fiscally transparent for patronage dividend purposes 129

19 November 2013 External T.I. 2011-0414201E5 F - Coop, ristournes, société de personne

A coop holds an interest in a limited partnership whose members also are members of the coop. For purposes of s. 135, are the customers of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 135 - Subsection 135(1) a Coop dealing with an LP of which it is a partner has the LP as its customer, and not the LP customers 176

8 July 2013 External T.I. 2012-0458601E5 F - T1134 and inactive FA

Before indicating that, where a foreign affiliate is the general partner of a partnership, the $25,000 of gross receipts provided for in the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 233.4 - Subsection 233.4(4) inactive FA gross receipts of $25,000 includes all partnership gross revenue 170

16 December 2005 External T.I. 2005-0150411E5 F - Roll-over Provisions and Partnership

CRA indicated that, given that a partnership’s income was computed as if it were a separate resident person, it was a “taxpayer” for s....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) partnership is a taxpayer for s. 51(1), 85.1(1) or 86(1) exchange purposes 121
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer partnership with non-resident partners is a taxpayer for s. 51(1), 85.1(1) or 86(1) rollover purposes 121

Tax Professionals Mini Round Table - Vancouver - Q. 10 (March 1993 Access Letter, p. 103)

Where one of the two equal partners of a partnership leases a building to the partnership, the partnership will be entitled to treat the full...

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Articles

Thompson, "The Partnership as a Separate Person: Opportunities and Pitfalls", 1984 Corporate Management Tax Conference, c. 5.

Paragraph 96(1)(c)

Cases

Deptuck v. Canada, 2003 DTC 5273, 2003 FCA 177

S.69(1)(a) applied to reduce the capital cost to a partnership of depreciable property purchased by it to the property's fair market value rather...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) common control at time of purchase by GP - LPs came in later 101
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) s. 69(1)(a) applies to a purchasing partnership as if it were a person 156

Paragraph 96(1)(e.1)

Administrative Policy

89 C.R. - Q.38

Expenditures on scientific research and development incurred by a partnership must be claimed by the partnership. S.96(1)(d) excludes the...

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Paragraph 96(1)(f)

Cases

Canada v. 594710 British Columbia Ltd., 2018 FCA 166

Woods JA found that the allocation of substantially all the profits of a limited partnership, at the partnership year end, to a “Lossco” that,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) allocation of most partnership profits to a lossco that acquired its interest at year end without economic risk was vacuous and abused ss. 96(1)(f), 103(1) and 160 634
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) stock dividend followed by redemption of the stock dividend shares effected in combination a transfer of property for no consideration 334
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) s. 103(1) likely applies to the allocation of most of the partnership profits at year end to a lossco that never had significant economic interest or risk in the partnership business 327
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) s. 152(8) cured an error in an assessment as to when the taxation year in question commenced 371

Symes v. The Queen, 89 DTC 5243, [1989] 1 CTC 476 (FCTD), rev'd 91 DTC 5397 (FCA)

In finding that a partner of a law firm was permitted to deduct the salary of her nanny on her personal return, rather than on the partnership's...

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The Queen v. Boorman, 77 DTC 5338, [1977] CTC 464 (FCTD)

A partnership agreement among practising surgeons was found, in light of all the surrounding circumstances, including the fact that a...

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See Also

Vincent v. Agence du revenu du Québec, 2020 QCCQ 3605

In May 2012, a Quebec-resident lawyer, who theretofore had been a partner of KPMG Canada, became a resident of France and started working at KPMG...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 7 use of the firm’s Quebec establishments imputed to a “silent” partner, who had departed from KPMG Canada to France, in ousting a Quebec-France Treaty exemption 258

594710 British Columbia Ltd. v. The Queen, 2016 TCC 288, rev'd 2018 FCA 166

Income account treatment of the profits realized by a condo-project limited partnership (HLP) was avoided through the corporate partners (the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) indirect transfer of property to taxpayer did not entail departure from FMV 462
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) GAAR reassessment must reflect the abuse 315
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) GAAR did not apply to the sale to a lossco of partner corps with pending condo sale profit allocations 660

Witt v. The Queen, 2008 DTC 4322, 2008 TCC 407

A convertible hedging strategy involving the taxpayer and his corporation ("RIW"), which previous jurisprudence entailing similar arrangements...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 43

XCO Investments Ltd. v. The Queen, 2005 DTC 1731, 2005 TCC 655

Before concluding that the method of income allocation between the taxpayers and another partner of a partnership was unreasonable under s....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) 130
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) GAAR could be applied to unreasonable partnership allocation 180

Blais v. The Queen, 2005 TCC 417 (Informal Procedure)

In finding that a Quebec general partnership between a husband and wife could not deduct "salary" of $27,600 paid to the husband, Bédard J stated...

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Klein v. The Queen, 2001 DTC 443 (TCC)

A loan that the taxpayer made to a Manitoba general partnership consisting of two Canadian-controlled private corporations qualified for...

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Card v. The Queen, 2000 DTC 1976 (TCC)

After the taxpayer withdrew from his law firm effective the end of its fiscal year the firm allocated income to him for that year based on his...

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

The taxpayers used borrowed money to make a contribution of capital to a partnership (Skeldon Estates) which was a member of a second partnership...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 102 - Subsection 102(2) top tier partners are lower tier partnership members 242
Tax Topics - Income Tax Act - Section 253.1 top tier partners are lower tier partnership members 242
Tax Topics - Statutory Interpretation - Provincial Law 97

Roy v. The Queen, 97 DTC 494 (TCC)

A partnership was dissolved by operation of law partway through its fiscal year as a result of the taxpayer and another partner selling their...

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Central Supply Company (1972) Ltd. v. The Queen, 95 DTC 434, [1995] 2 CTC 2320 (TCC)

The corporate taxpayers, were found to have become members of a partnership (that had incurred CEE) for one day at the end of the partnership's...

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Crestglen Investments Ltd. v. MNR, 93 DTC 462, [1993] 2 CTC 3210 (TCC)

In the course of finding that a corporation, that provided the management services of an officer and specified shareholder ("Cipora") to two...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Personal Services Business an individual partner could not also have been an employee - also her remuneration was at risk 209

MacKinlay v. Arthur Young McClelland Moores & Co., [1989] BTC 587 (HL)

Lord Oliver stated (p. 589) that "if, with the agreement of his partners, [a partner] pays himself a 'salary', this merely means that he receives...

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Rye v. Rye, [1962] A.C. 496 (HL)

The appellant and his brother, who were the two partners of a law firm, moved the office of the partnership to premises owned by them as equal...

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Storrar Dunbrik Ltd. v. MNR, 52 DTC 154 (ITAB)

A partnership transferred its assets to a corporation (the taxpayer) that was controlled by its partners. S. 8(3) of the 1949 Act would have...

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Administrative Policy

9 August 2019 External T.I. 2019-0813021E5 - TOSI and excluded shares

CRA considered that:

Where the jurisdictional law regarding partnerships provides that a partnership is an agreement among the partners to carry...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Excluded Shares - Paragraph (c) a corporate partner carries on the business of the partnership for TOSI (and other) purposes 262

21 June 2017 External T.I. 2016-0678361E5 F - Capital Dividend Account

The addition to a private corporation’s capital dividend account does not include any portion of a “negative ACB” gain under s. 40(3.1).

A...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)A) negative ACB gain realized by a partnership is subject to the exclusion for s. 40(3.1) gains when allocated to a partner 226

11 October 2013 Roundtable, 2013-0495891C6 F - Partnership's capital gains allocation - CGE

Where a partnership has realized only $150,000 in capital gains from the disposition of capital property eligible for the capital gains deduction...

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19 March 2013 Internal T.I. 2010-0385931I7 - Taxable Canadian property and Partnerships

Where a partnership disposed of a 25% shareholding in a public real estate company which was taxable Canadia propery to it, a non-resident...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) partnership look-through 278
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Canadian Property - Paragraph (e) TCP rules not applying to foreign partners of partnership 278

29 February 2016 External T.I. 2015-0613961E5 - Patronage dividends - partnership income

CRA indicated that in the determination of the “income of the taxpayer for the year” for purposes of applying the definition in s. 135(4) of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 135 - Subsection 135(4) - Income of the Taxpayer Attributable to Business Done With Members flow-through of partnership income to cooperative 233

2014 Ruling 2013-0516071R3 - Reorganization

CRA ruled on a transaction in which (to simplify somewhat) the units of an LP (LP1) which already has earned profits for the year will be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) transfer of already-earned profits to Lossco by transfer of LP units with income allocation at LP year end 326
Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(14) transfer by Profitco of profitable LP to Lossco which is affiliated by virtue of common NR indirect parent 100

25 April 2013 Internal T.I. 2013-0478511I7 F - Distribution à un commanditaire

A limited partnership engaged principally in identifying and acquiring commercial real estate realized a capital gain from the disposition of real...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate real estate capital gains flowed through to limited partner retained character 226
Tax Topics - Excise Tax Act - Section 272.1 - Subsection 272.1(1) distinction between return on partnership investment and services rendered by partner in the course of a separate business 295
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) services rendered by limited partner to LP gave rise to ACB increase if no s. 9 income inclusion for fee income 133

12 March 2012 External T.I. 2011-0431171E5 F - Répartitions des revenus et pertes entre associés

In response to a question as to whether a partnership may allocate gains and losses among its members on the basis of potential consequences to...

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12 November 2008 External T.I. 2008-0295731E5 F - Supplément remboursable pour frais médicaux

The income, excluding losses, from each business carried on by an individual was required to be at least $2,984 under the definition. CRA, after...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 122.51 - Subsection 122.51(1) - Eligible Individual - Paragraph (c) - Subparagraph (c))ii) reference to sources of income from business did not require netting partnership business loss against business income from 2nd partnership 64

Income Tax Technical News, No. 30, 21 May 2004

Remuneration received by a partner for work performed in the course of the partnership business is properly treated as a distribution of income or...

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27 August 1997 External T.I. 9722815 - LIMITED PARTNERS

"Notwithstanding the Robinson Trust appeal, it is still Revenue Canada's general view that limited partners would be regarded as carrying on an...

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31 March 1994 External T.I. 5-94064

Where a corporation ("A") has successored pools that relate solely to Property A, and unsuccessored pools relating to to other property additions...

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91 C.R. - Q.2

A partner's share of production income retains its character as such for purposes of the s. 66.7 successor rules.

85 C.R. - Q.46

The partner's share of income in bona fide situations will be determined in accordance with the partnership agreement notwithstanding that he was...

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81 CR - Q.23

A partner who is a member of a partnership that carries on an active business is carrying on that active business and is using the partnership...

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Articles

Bourgeois, "Some Tax Considerations in Real Estate Development and Construction: Soft Costs, Capitalization, Inventory Write-Downs and Characterization of Partnership Income", 1995 Corporate Management Tax Conference Report, c. 4.

Includes discussion of whether the characterization of income derived from real estate is affected by the holding of the real estate by a...

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Paragraph 96(1)(g)

Cases

Brown v. Canada, 2003 DTC 5298, 2003 FCA 192 (FCA)

In finding that an acquisition of property by a partnership of which the taxpayer subsequently became a member was subject to paragraph 69(1)(a)...

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Chutka v. Canada, 2001 DTC 5093 (FCA)

A sale of equipment by a corporation to a partnership whose general partner was wholly-owned by the same individual who owned the vendor...

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The Queen v. Signum Communications Inc., 91 DTC 5360, [1991] 2 CTC 31 (FCA)

A limited partner, whose capital invested was $2500, was entitled to deduct a partnership loss of $111,870 which was allocated to it. After...

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See Also

Mazurkewich v. The Queen, 2007 DTC 1496, 2007 TCC 517 (Informal Procedure)

In allocating the losses incurred by a partnership comprising two men and their wives, the accountant allocated notional wages to the two wives,...

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Jannock Ltd. v. The Queen, 96 DTC 1500, [1996] 3 CTC 2237 (TCC)

The taxpayer was able to deduct the losses allocated to it as a result of its acquisition of substantially all the interests in a partnership...

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Archbold v. The Queen, [1995] 1 CTC 2872 (TCC)

After the Minister had disallowed the deduction by a husband/wife partnership of "commissions" paid to the wife equal to 10% of all sales, Lamarre...

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McComb v. MNR, 93 DTC 471 (TCC)

By virtue of his failure to rescind his subscription to a limited partnership after becoming aware that the offering memorandum contained a...

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Ward v. The Queen, 88 DTC 6212, [1988] 1 CTC 336 (FCTD)

Reed v. Young was followed in finding that no "at risk" principle applied to the determination of the quantum of expenses incurred by members of a...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Ownership doctors were property owners notwithstanding holding of title by trustees 49
Tax Topics - Income Tax Act - Section 18 - Subsection 18(2) 51
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business adventure is not the carrying on of a business 46
Tax Topics - Income Tax Act - Section 79 34

Reed v. Young, [1986] BTC 242 (HL)

The loss of a limited partner of a partnership in the business of producing films was the portion of the total partnership loss allocated to her...

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Administrative Policy

7 September 2010 Internal T.I. 2010-0372191I7 F - Société de personnes - partage d'une perte

A general partnership (SENC), which was generating losses, paid an amount in the year to one of the three equal partners (an individual), and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 salary paid to partner was non-deductible 81

Income Tax Technical News, No. 30, 21 May 2004

Although there is no impediment to the creation of partnership interests that carry different entitlements to share in the income or other...

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12 February 2003 Internal T.I. 2002-0176917 - partnerships&income allocation

"Although it is not possible for a partner to be allocated an amount of income or loss greater than the income or loss realized by a partnership,...

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23 May 2002 Internal T.I. 2002-0132797 - partnership salary

The two partners of a farming partnership were a husband who worked full-time on the farm receiving a "salary" of $20,000 per annum and his wife...

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15 May 2002 External T.I. 2001-0103605 F - Prêt par un Associé à une Société

Is the interest on a loan made to a partnership by a partner deductible under s. 20(1)(c)? CRA responsed (TaxInterpretations translation):

The...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) validity of partner loan 129

6 March 1991 Memorandum (Tax Window, No. 1, p. 11, ¶1135)

Discussion of a Canadian resident becoming a partner in a non-resident partnership that owns depreciable property whose historical cost exceeds...

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11 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 20, ¶1008)

If a partnership expends amounts on research and development that are not described in s. 37 but which are deductible under s. 9, they will not be...

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89 C.R. - Q.38

RC is appealing the decision in Signum and is continuing to reassess based on the positions set out in paragraph 20 of IT-138R.

Subsection 96(1.01) - Income allocation to former member

Administrative Policy

T4068(E) Guide for the Partnership Information Return (T5013 Forms)

S. 96(1.01) special allocation is made at the end of the regular partnership taxation year

Line 350 – Other adjustments

… Paragraph...

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9 October 2015 APFF Roundtable Q. 16, 2015-0595801C6 F - At-risk amount

CRA noted that there is no similar ACB-adjustment relief to that in s. 96(1.01)(b)(ii) where there is a disposition of substantially all (e.g.,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.2) - Paragraph 96(2.2)(a) a part disposition of a partnership interest results in an anomalous pro rata reduction in the partner’s at-risk amount for the year of disposition 137

14 June 2012 External T.I. 2012-0433281E5 - Partnership requesting a change to FPE

After noting that although under s. 249.1(7) a change in fiscal year end is required to be approved by the Minister, "a change to the fiscal...

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29 July 2009 External T.I. 2008-0297011E5 F - Conversion de participations dans une SNC

A partnership has several members, some of whom hold partnership interests which participate in both income and capital of the partnership. The...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition no disposition if new partnerships interests exchanged for old interests that in totality are not substantially distinguishable 213
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) s. 97(2) rollover not available if new partnerships interests exchanged for old interests are not in totality substantially distinguishable 274
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) where only income interest and not capital interest in a partnership disposed of, there is part disposition of partnership interest with resulting reduced ACB for remainder interest 163

4 April 2007 External T.I. 2006-0214411E5 - ACB of partnership

Mr. X acquired a 1/3 interest in a calendar year professional partnership from two existing arm’s length partners on January 1, 2004, for...

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Subsection 96(1.1) - Allocation of share of income to retiring partner

Cases

The Queen v. Lachance, 94 DTC 6360 (FCA)

At the time of his retirement from a professional partnership carrying on business in nine provinces, the taxpayer received a payment of...

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Dacen v. The Queen, 89 DTC 5297, [1989] 2 CTC 44 (FCTD)

An agreement which the taxpayer entered into with a firm of chartered accountants with respect to his withdrawal from the firm, which was...

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Delesalle v. The Queen, 85 DTC 5613, [1986] 1 CTC 58 (FCTD)

Before turning to s. 96(1.1), McNair J stated (at p. 5619) that the issue before him was whether the taxpayer's withdrAwal as a partner from a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Partnership Interests partnership interest buyback not distribution 62
Tax Topics - Statutory Interpretation - Absurdities 39

Laferrière v. The Queen, [1985] 2 CTC 190 (FCTD), aff'd 94 DTC 6423 (FCA)

S.96(1.1) was not applicable to the appellant's share of a partnership's work-in-progress, sold by him as part of the sale of his partnership...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Partnership Interests partnership interest sale by non-capital partner 39

Administrative Policy

9 October 2015 APFF Roundtable Q. 17, 2015-0595811C6 F - Application of 96(1.1)

CRA declined to comment specifically on a scenario in which a Canadian professional partnership, which holds a 70% interest in a corporation...

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10 September 2014 External T.I. 2014-0522551E5 - Income for retired partner

The "Retired Partner" retired from a partnership of individuals (the Partnership – which had an off-calendar fiscal period ending January 31...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 34.1 - Subsection 34.1(1) retroactive effect of s. 96(1.1) agreement to require s. 34.1(1) inclusion 270

20 August 2008 External T.I. 2008-0288561E5 F - Convention de partage d'une société de personnes

The partnership agreement for a services partnership provides that a partner who has withdrawn will be paid over five years an amount respecting...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) payment to a retired partner in excess of partnership income is treated as a constructive withdrawal of capital by the other partners, reducing their ACB 127
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) CRA generally does not challenge sharing agreements based on each partner’s contribution 56

29 April 2003 External T.I. 2003-00646

Allocations made to the spouse of a retired partner pursuant to s. 96(1.1) would, depending on the circumstances, also be included in the income...

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26 February 2003 External T.I. 2002-0178335 - PARTNERSHIP AS A TAXPAYER

In light of s. 102(2), s. 96(1.1) may apply to a retiring member of a partnership that is itself a partnership.

26 July 1991 T.I. (Tax Window, No. 7, p. 10, ¶1375)

S.96(1.1) does not deem a retired partner to be a member of the partnership for purposes of the definition of "specified member" in s. 248(1)....

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16 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 8, ¶1052)

Where the partnership agreement provides for an income allocation to the retiring partner in the year of death equal to the life insurance...

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86 C.R. - Q.53

The retirement agreement determines whether s. 96(1.1) or s. 98.1 applies, and the period over which a retired partner is to receive payment is...

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84 C.R. - Q.26

S.96(1.1) can't be applied to allocate the income of a proprietor to his former partner.

84 C.R. - Q.27

Since the former partner is not actively engaged in business, income allocated to him pursuant to s. 96(1.1 is not included in earned income as...

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IT-278R "Death of a Partner or a Retired Partner"

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 98.1 - Subsection 98.1(1) 0

IT-242 "Retired Partners" under "Income Interest"

IT-338R "Partnership Interests - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"

Articles

Ken S. Skingle, V. Daniel Jankovic, "Can a Partner Enter into a Contract with a Partnership of Which the Partner Is a Member?", Tax for the Owner-Manager, Volume 13, Number 4, October 2013, p. 8

Issue (p. 8)

As a matter of law, can a partner (A Co) enter into a valid and enforceable contract with a partnership (ABLP) of which A Co is a...

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Paragraph 96(1.1)(a)

Administrative Policy

18 December 2009 External T.I. 2009-0313121E5 F - Sommes reçues par un associé qui se retire

Upon the taxpayer’s withdrawal from a partnership, the partnership agreement (the “Original Agreement”) provided for the payment to him or...

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Subsection 96(1.6) - Members of partnership deemed to be carrying on business in Canada

Subsection 96(1.8)

Administrative Policy

5 October 2018 APFF Roundtable Q. 12, 2018-0768831C6 F - Tax on Split Income and Partnership

CRA confirmed that the tax on split income is inapplicable to a family partnership that invested in the stock market where the children had not...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Split Income - Paragraph (a) - Subparagraph (a)(i) family partnership investing in designated stock exchange shares not subject to TOSI rules 136
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1.1) having non-contributing children as members of a family stock market partnership is subject to challenge under s. 103 85

Subsection 96(2)

See Also

Aquilini (Estate) v. The Queen, 2019 TCC 132

Pizzitelli J found that, in light of ss. 96(2) and 102(2), partnership members of a limited partnership (“AIGLP”) were to be treated as...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1.1) partnership income and losses should be allocated proportionately to capital invested and recognizing work performed 566

Subsection 96(2.1) - Limited partnership losses

Cases

Canada v. Green, 2017 FCA 107

The taxpayers were members of a limited partnership Monarch Entertainment 1994 Master Limited Partnership (‘MLP”) which, in turn, was the...

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Locations of other summaries Wordcount
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) 115
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) partnerships not taxpayers for ss. 3 and 111 purposes 41
Tax Topics - Income Tax Act - 101-110 - Section 102 - Subsection 102(2) ITA recognizes 2-tier partnerships 72

See Also

Green v. The Queen, 2016 DTC 1018 [at 2629], 2016 TCC 10

The taxpayers were members of a limited partnership (‘MLP”) which, in turn, was the 99.999% limited partner of 31 lower-tier limited...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(e) limited partnership losses flow through a 2-tier LP structure 73

Administrative Policy

22 September 2017 External T.I. 2016-0632881E5 - Regulation 808

CRA found that a non-resident corporate member of a Holding partnership holding, in turn, an interest in an “opco” partnership carrying on a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 808 - Subsection 808(4) - Paragraph 808(4)(b) member of upper-tier partnership is a member of a lower-tier partnership for investment allowance purposes 306

6 January 2014 External T.I. 2013-0477711E5 - Limited partnership losses and dissolution

A sale of assets by a limited partnership before a cessation of its operations resulted in a terminal loss. CRA indicated that since the limited...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 99 - Subsection 99(1) 2 taxation years if s. 98(1)(a) operates to deem partnership to continue after its termination 141

September 1991 Memorandum (Tax Window, No. 10, p. 12, ¶1478)

The statutory at-risk amount rules apply only to partnerships.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 8

87 C.R. - Q.6

Advance income tax rulings will not be provided where one of the main reasons for the arrangement can reasonably be considered to be to circumvent...

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86 C.R. - Q.3

Expenses incurred in the issuance of units in a partnership exclusively engaged in farming aren't subject to the restriction.

Paragraph 96(2.1)(f)

Articles

Joint Committee, "July 27, 2018 Legislative Proposals", 10 September 2018 Submission

Alternatives to proposal of denying excess lower-tier losses (pp. 8-10)

There will be no ability to carryover unutilized limited partnership...

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Subsection 96(2.2) - At-risk amount

Administrative Policy

21 November 2017 CTF Roundtable Q. 10, 2017-0724291C6 - Tax Shelters

In indicating that it “will generally not issue an advance income tax ruling … with respect to a limited partnership financing arrangement...

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Paragraph 96(2.2)(a)

Administrative Policy

9 October 2015 APFF Roundtable Q. 16, 2015-0595801C6 F - At-risk amount

If a taxpayer disposes of all of its limited partnership interest partway through the partnership year but is allocated a partnership loss for...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.01) life is tough in the big city 36

Paragraph 96(2.2)(c)

Administrative Policy

21 December 2009 Internal T.I. 2008-0296131I7 F - Fraction à risque

Canco finances its US operations (held through USLLC) through a tower structure (with USLLP, at the top of the structure being held by Canco...

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2002 Ruling 2002-0156163 - PARTNERSHIP AT-RISK AMOUNT

The principal amount of promissory notes issued by limited partners to a partnership as part of the purchase price for their limited partnership...

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88 C.R. - "'At Risk'" - "Statutory 'At-Risk' Rules"

S.96(2.2)(c) does not apply to amounts owing which arose as a result of legitimate commercial transactions which are unrelated to the limited...

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Paragraph 96(2.2)(d)

Cases

Brown v. Canada, 2003 DTC 5298, 2003 FCA 192 (FCA)

Although the at-risk amount of the taxpayer at the end of the year in which he became a partner was reduced as a result of a partnership amendment...

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See Also

Caron v. The Queen, 2003 DTC 1444, 2003 TCC 794 (Informal Procedure)

Mortgage debt, that was charged on real estate legally owned by a corporate subsidiary of a limited partnership of which the taxpayers were...

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Caron v. The Queen, 2003 DTC 1444, 2003 TCC 794 (Informal Procedure)

The limited partners of a partnership received a benefit described in s. 96(2.2)(d) when a corporation owned by the limited partnership guaranteed...

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McCoy v. The Queen, 2003 DTC 660, 2003 TCC 332

A partnership purchased securities trading software from a vendor corporation pursuant to an acquisition agreement which contained a...

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Brown v. The Queen, 2001 DTC 1094 (TCC), aff'd supra 2003 DTC 5298 (FCA)

The agreement for the purchase by a general partnership of software contained a representation by the vendor that in its capacity of distributor...

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Administrative Policy

14 June 2007 External T.I. 2006-0209341E5 F - Utilisation d'un bien d'une société de personnes

A partnership in whose farming business the partners are actively involved owns the residence of one of the partners, who does not pay rent, but...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) personal use of property is a factor going to the reasonableness of the profit-sharing arrangements 74
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) conferral-of-benefit provisions do not apply to a partner’s personal use of partnership property other than car 71
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose partner’s use of partnership property is addressed by denying partnership income deductions and under s. 103, rather than through benefit-conferral provisions 112

10 February 1997 External T.I. 9621935 - : Farm Partnership and At-Risk Adjustments

A right of a partner to sell his interest to a third party for a pre-determined price, a guarantee to the partnership of a certain level of...

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27 June 1995 External T.I. 9510555 - LIMITED PARTNER GUARANTEED RETURN

Where prior to the acquisition by limited partners of their units, a film production (in respect of which the partnership is to provide services...

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11 April 1995 External T.I. 9508655 - PARTNERSHIP AT-RISK RULES RE LOAN

Prior to the enactment of ss.40(3.1) and (3.2), it had been agreed that excess revenues generated by a limited partnership would be distributed to...

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2 June 1993 Income Tax Severed Letter 9301835 - At-risk Amount—Partnership General

The amount of reduction under s. 96(2.2)(d) at any particular time to a limited partner's at-risk amount as a result of limited recourse...

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Rulings Directorate Discussion and Position Paper on Motion Picture Films and Video Tapes as Tax Shelters, Version 29/3/93 930501 (C.T.O. "Motion Picture Films - C.C.A.")

A letter of credit given by a financial institution to guarantee the payment of a prescribed revenue guarantee or the payment of a put of a film's...

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12 June 1992 Commentary on 1992 CPTS Roundtable Q. 4, 5-921638

If the intent is to refund the partners' original investment in a partnership at some convenient time once non-recourse financing received by a...

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12 June 1992 Memorandum (Tax Window, No. 21, p. 11, ¶2021)

S.96(2.2)(d) generally will not apply where a general partnership receives limited recourse financing in respect of legitimate commercial...

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92 C.R. - Q.11

If it is clear from all the facts that an arrangement is a joint venture or co-ownership and not a partnership, the at-risk amount rules will not...

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92 CPTJ - Q.4

Although s. 96(2.2)(d) generally will not apply with respect to a benefit that may arise by virtue of a general partnership obtaining limited...

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November 1991 Memorandum (Tax Window, No. 13, p. 18, ¶1583)

A guarantee of a loan made to a partner to finance the acquisition of a partnership interest, including a government guarantee, will render that...

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September 1991 Memorandum (Tax Window, No. 9, p. 22, ¶1456)

Where there is personal use by a partner of capital property of the partnership, the partner will be deemed to be a limited partner if the partner...

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14 August 1991 T.I. 911724

(See also 5-930183.)

Where in order to purchase a partnership unit valued at $100, a partner invests $25 of his own funds and borrows $75 from a...

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21 June 1991 T.I. 910822

S.96(2.2)(d) will have no application where two partners borrow money from the bank and lend the proceeds at a reasonable rate of interest but on...

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11 June 1991 T.I. 910823

"Paragraph 96(2.2)(d) of the Act generally will not apply with respect to the benefit that may arise by virtue of a limited partnership obtaining...

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15 May 1991 T.I. (Tax Window, No. 3, p. 18, ¶1234)

A revenue guarantee given in respect of printing and advertising expenses incurred by persons who have not incurred the capital cost of the film...

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March 1991 T.I. (C.T.O. Doc. No. 93)

A non-interest bearing loan will reduce the at-risk amount if the loan was negotiated as part of the package of investing in the partnership.

91 CPTJ - Q.6

Government assistance that is universally available will not reduce the at-risk amount.

89 C.M.TC - Q.7

where the partnership guarantees the debts of the limited partners, ss.96(2.2)(d) to (f) generally reduce the at-risk amounts of the partners by...

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23 November 1988 TI 5-6721

An indemnity by one partner of obligations incurred by the others as a result of the first partner acting outside his authority will not cause the...

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88 C.R. - "'At Risk'" - "Statutory 'At-Risk' Rules"

Universally available government assistance is not a benefit. Limited recourse borrowings constitute a deductible benefit. Where the purchase...

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88 C.R. - Q.16

A right to receive a grant from the developer in the event that the limited partner's share of partnership cash flow is insufficient to service...

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88 C.R. - F.Q.19

The flow-through of CEDIP entitlements to partners reduces their at-risk amounts.

88 C.R. - F.Q.20

Where a revenue guarantee exceeds expected expenses, the reduction of the at-risk amount is the amount of the excess over reasonably expected...

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86 C.R. - Q.5

There may be a perception of conflict between the policies of the flow-through share rules and the at-risk rules.

Articles

John Tobin, "Infrastructure and P3 Projects", 2017 Conference Report (Canadian Tax Foundation), 10:1-31

Whether non-recourse nature of partnership-level debt is a loss-reducing benefit to a partner (p. 10:12)

[O]ften, debt to Projectco’s partners...

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Edward A. Heakes, "Limited Partnerships: Still at Risk", 1994 Corporate Management Tax Conference, C. 7.

Subsection 96(2.3) - Idem [At-risk amount]

Administrative Policy

9 March 2012 Internal T.I. 2011-0421491I7 - At-Risk Amount and Paragraph 111(4)(e)

where the adjusted cost base (ACB) of a partnership interest has been stepped up under s. 111(4)(e), s. 96(2.3) will reduce the ACB of the...

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Subsection 96(2.4) - Limited partner

Paragraph 96(2.4)(a)

See Also

Vinet v. Agence du revenu du Québec, 2019 QCCA 574

The taxpayer, who was the sole limited partner of a Quebec limited partnership (“SEC”) that owned and operated multiple farms, and the...

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Vinet v. Sous-ministre du Revenu du Québec, 2017 QCCQ 3957, aff'd 2019 QCCQ 574

The taxpayer was the limited partner of a Quebec limited partnership (“SEC”), which owned and operated multiple farms, and the president of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 253.1 involvemement of limited partner in LP business was qua officer of GP 177

Foley v. The Queen, 2003 DTC 1320, 2003 TCC 680

Although the taxpayers were designated as the limited partners of a partnership, each of them was in control of a part of the partnership's...

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Laplante v. The Queen, 96 DTC 1196, [1995] 1 CTC 2647 (TCC)

The taxpayer was not a limited partner of a partnership governed by Ontario law given that the partnership had not been registered under the...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Provincial Law 94

Haughton Graphics Ltd. v. Zivot (1986), 33 BLR 1225 (Ont. S.C.), aff'd (1988), 38 BLR XXXIII (Ont CA), leave to appeal to the S.C.C. denied [1988] 1 SCR XV.

Section 63 of the Partnership Act (Alberta) (which is essentially the same as section 13 of the Limited Partnerships Act (Ontario)) was found to...

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Administrative Policy

88 C.R. - F.Q.21

Where a general partnership is converted to a limited partnership, s. 96(2.4)(a) will deem the partners to have been limited partners for the...

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88 C.R. - "'At Risk'" - "Statutory 'At-Risk' Rules"

Although the partnership acts of most of the common law provinces provide that an incoming partner is not liable for the debts which the...

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Articles

Heakes, "Limited Partnerships: Still at Risk", 1994 Corporation Management Tax Conference Report, c. 7.

Flannigan, "Limited Partner Liability: A Response", (1992), 71 Can. Bar Rev. 553.

Apps, "Limited Partnerships and the 'Control' Prohibition: Assessing the Liability of Limited Partners", (1991), 70 Can. Bar Rev. 611.

Joel A. Nitikman, "Limited Partnerships: Not So Limited?", Canadian Current Tax, June 1991, p. C65.

Paragraph 96(2.4)(b)

Cases

Docherty v. Canada, 2005 DTC 5199, 2005 FCA 93

In finding that the taxpayers were limited partners by virtue of s. 96(2.4)(b), the Tax Court judge correctly relied on the existence of benefits...

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Brown v. Canada, 2003 DTC 5298, 2003 FCA 192 (FCA)

The taxpayer was deemed to be a limited partner by virtue of the fact that within two years of his becoming a general partner, a partnership...

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See Also

Rouleau c. La Reine, 2007 DTC 1619, 2007 TCC 338 (Informal Procedure)

Archambault J. found that there is an arrangement under which investors in a limited partnership would be able to sell their limited partnership...

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Ouellet c. La Reine, 2004 DTC 2706, 2004 TCC 308 (Informal Procedure)

After finding that an alleged partnership between the taxpayers and others did not exist, Lamarre Proulx J. went on to find that had the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 55

Administrative Policy

2 June 1993 Income Tax Severed Letter 9301835 - At-risk Amount—Partnership General

A partner of a general partnership can be a limited partner for purposes of the at-risk amount rules where the partnership is party to a limited...

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92 C.R. - Q.16

A partner may be deemed to be a limited partner if as a result of his personal use of partnership property he is entitled to receive an amount...

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Paragraph 96(2.4)(d)

Administrative Policy

30 September 1992 T.I. (Tax Window, No. 24, p. 18, ¶2180)

The word "arrangement" is open to very broad interpretation ranging from formal contracts to verbal understandings. S.96(2.4)(d) can apply where a...

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Words and Phrases
arrangement

Subsection 96(2.5) - Exempt interest

See Also

Central Supply Company (1972) Ltd. v. The Queen, 95 DTC 343 (TCC)

A partnership that had abandoned its unsuccessful drilling operations and, during the relevant period was carrying out various winding-up...

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Administrative Policy

21 June 1994 T.I. (C.T.O. "Non-Statutory At-Risk Rules")

As a result of the decision in The Queenv. Signum Communications Inc., 91 DTC 5360 (FCA), a partnership interest that qualifies as an exempt...

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9 May 1991 Memorandum (Tax Window, No. 3, p. 21, ¶1253)

The exemption may be applied to any partnership which was actively carrying on business prior to February 26, 1986 irrespective whether the...

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88 C.R. - "'At Risk'" - "Pre-February 26, 1986 Partnerships"

RC will continue to follow its position on the at-risk rules until the Signum Communications case is resolved.

87 C.R. - Q.7

A limited partner's share of partnership losses cannot exceed his equity in the partnership.

86 C.R. - Q.1

The non-statutory at-risk rules apply to exempt interests; no grandfathering opinions are given.

85 C.R. - Q.45

Definition of equity of a limited partner.

84 C.R. - Q.73

A limited partner's share of partnership losses cannot exceed his equity; and his equity generally is the amount that he contributed (or a...

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Subsection 96(3) - Agreement or election of partnership members

Cases

Schultz v. The Queen, 95 DTC 5657, [1996] 2 CTC 127 (FCA)

An s. 39(4) election filed by one of the two taxpayers was not valid because she was found to be in partnership with her husband and, accordingly,...

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Subsection 96(4)

Administrative Policy

T4068(E) Guide for the Partnership Information Return (T5013 Forms)

Filing deadline for tiered partnerships references the “end” members

Chapter 4 – Due dates

Annual return

The due date for filing an annual...

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Subsection 96(5.1)

Cases

Glenogle Energy Inc. v. Canada (Attorney General), 2022 FC 198

In January 2015, the taxpayer transferred resource properties to a limited partnership that was wholly-owned by it, directly and indirectly. The...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(7.1) taxpayer worse off for filing s. 97(2) elections on a timely basis rather than late 233

Administrative Policy

IC07-1R1 Taxpayer Relief Provisions 18 August 2017

Circumstances for accepting a late or amended election

56. Circumstances where a request may be accepted include:

(a) There have been tax...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.2) 338

Subsection 96(6) - Penalty for late-filed election

Administrative Policy

7 February 1992 T.I. (Tax Window, No. 16, p. 20, ¶1740)

The penalty under s. 96(6)(b) is payable by each member of the former partnership rather than the partnership itself.

Subsection 96(8)

Paragraph 96(8)(c)

Administrative Policy

17 January 2017 Internal T.I. 2016-0647161I7 - Capital gains of a partnership

Although where a member of a non-resident partnership becomes a Canadian resident in a year, s. 96(8) prevents the recognition for ITA purposes of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 114 a year-end income allocation by a non-resident partnership to an immigrant included offshore capital gains realized pre-immigration 182