Subsection 97(1) - Contribution of property to partnership
Cases
Iberville Developments Limited v. Canada, 2020 FCA 115
A corporate taxpayer having shopping centres with a cost amount and fair market value of $14M and $130M, respectively, contributes the properties...
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| Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) - Paragraph 97(2)(b) | the starting ACB of a partnership interest was determined exclusively under s. 97(2)(b) | 445 |
See Also
Iberville Developments Limited v. The Queen, 2018 TCC 102, aff'd 2020 FCA 115
The taxpayer unsuccessfully argued that the initial cost of its interest in an LP was the fair market value of the property contributed by it to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) | the starting ACB of a partnership interest was determined exclusively under s. 97(2)(b)/ no requirement to issue units | 659 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | only one interest in a partnership | 167 |
Administrative Policy
Income Tax Regulation News, Release No. 3, 30 January, 1995 under "Use of a Partner's Assets by a Partnership"
When a partnership acquires the right to use the property of a partner for no rent, the partner will be deemed by s. 97(1) to dispose of that...
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 70 | |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) | 70 |
Subsection 97(2) - Rules if election by partners
Cases
Canada v. Oxford Properties Group Inc., 2018 FCA 30
When Oxford Properties was sold to an OMERS subsidiary, the purchaser first negotiated that Oxford would drop various properties down into LPs on...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | using the s. 88(1)(d) bump on newly-formed rental property LPs to avoid indirect recapture income under s. 100(1) was abusive | 975 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) | s. 88(1)(d) bump is intended to permit the transfer of ACB that otherwise would be lost to another property that is taxed in the same way | 371 |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) | s. 98(3)(c) bump is intended to avoid gain realization where there has been no economic gain | 267 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) | 3-year time limitation in s. 69(11) did not establish safe harbor for avoidance of recapture on sale after that period | 382 |
| Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) | purpose is to ensure that latent recapture will be recognized on sale to tax exempt | 254 |
| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | GAAR question as to determining a provision’s object was subject to correctness standard | 169 |
| Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. | statement that amendment was for “clarification” was self-serving | 209 |
| Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) | determination of whether amendment merely clarified requires review of pre-amendment state of law | 146 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) | consequential s. 245(2) adjustment must be scaled to the abuse | 391 |
R & S Industries Inc. v. Canada (National Revenue), 2016 FC 275
A transfer agreement for the drop-down under s. 97(2) of assets by the taxpayer (R&S) to a controlled LP specified that the elected amounts in a...
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| Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Act - Section 18.1 - Subsection 18.1(2) | extension not granted due to unexplained lengthy delay and lack of substantive merit | 579 |
Canada v. Pinot Holdings Ltd., 99 DTC 5772 (FCA)
The taxpayer transferred land to a partnership for consideration of $13.5 million which was satisfied by that amount being paid by the...
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| Tax Topics - General Concepts - Substance | 92 |
Continental Bank of Canada v. R., [1997] 1 CTC 13, 96 DTC 6355, [1996] 3 CTC 14
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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| Tax Topics - General Concepts - Sham | no sham if docs reflect legal reality | 92 |
| Tax Topics - General Concepts - Tax Avoidance | no sham if docs reflect legal reality | 92 |
Haro Pacific Enterprises Ltd. v. The Queen, 90 DTC 6583, [1990] 2 CTC 493 (FCTD)
The taxpayer ("Haro") contributed real estate worth $1.9 million to a partnership and the other member ("B.C. Ltd.") contributed $950,000 in cash....
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 49 |
See Also
Iberville Developments Limited v. The Queen, 2018 TCC 102, aff'd 2020 FCA 115
In 2003 and 2004, the taxpayer (“Iberville”) contributed shopping centres worth $130M and with a cost base of $14M and received non‑share...
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| Tax Topics - Income Tax Act - Section 97 - Subsection 97(1) | s. 97(1) establishes FMV cost for partner's interest | 136 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | only one interest in a partnership | 167 |
R & S Industries Inc. v. The Queen, 2017 TCC 75
The taxpayer (“R & S”) transferred its business to a limited partnership, with a joint s. 97(2) election being made. The Minister reassessed...
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| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | Tax Court had jurisdiction to consider change to description of consideration in s. 97(2) election form | 190 |
Oxford Properties Group Inc. v. The Queen, 2016 TCC 204, rev'd 2018 FCA 30
A corporation (“BPC”), which was mostly owned by a Canadian pension fund (“OMERS”), obtained the agreement of a predecessor of the...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | no abuse in using 88(1)(d) bump to avoid s. 100 after 3-year s. 69(11) period | 557 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) | subsequent sale part of series as it utilized the benefit of previous LP packaging and bump transactions | 387 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) | purpose: to push down ACB of shares of sub to qualifying non-depreciable property | 489 |
| Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) | subsequent amendment shed light on scope of previous version | 107 |
| Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) | S. 100 operates only on outside basis gain | 290 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) | Parliament provided safe harbour for sales after 3 years | 204 |
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) | purpose: to preserve high outside basis through push down | 293 |
Ceco Operations Ltd. v. The Queen, 2006 DTC 3006, 2006 TCC 256
The taxpayer transferred assets of a business to a partnership in what was intended to be an s. 97(2) rollover transactions in consideration for...
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| Tax Topics - General Concepts - Substance | 99 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 270 | |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 265 |
Vantem Holdings Ltd. v. R., 98 DTC 1335, [1998] 1 CTC 2821 (TCC)
The taxpayer borrowed money from a bank, contributed the borrowed money and a shopping centre to a partnership in consideration for the assumption...
MDS Health Group Ltd. v. The Queen, 96 DTC 1324, [1995] 2 CTC 2526 (TCC), aff'd 97 DTC 5009 (FCA)
The taxpayer contributed technology valued at U.S. $3 million to a newly-formed partnership between it and an arm's length Canadian corporation...
Administrative Policy
2023 Ruling 2022-0958681R3 - Conversion to open-end unit trust
The Fund, which is a mutual fund trust, a REIT and a closed-end unit trust described in s. 108(2)(b), holds a subsidiary limited partnership which...
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| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(2) - Paragraph 108(2)(a) | conversion to s. 108(2)(a) unit trust through addition of retraction right/ limitation placed on term of any redemption notes | 425 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on conversion of closed-end to open end unit trust | 90 |
2 December 2014 CTF Annual Roundtable Q. 6, 2014-0547321C6 - Q.6 97(2) Canadian Partnership Requirement
Transactions which entailed the formation on a rollover basis of a Canadian partnership followed immediately by the admission of a non-resident...
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| Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) | avoidance of s. 100 through partnership boot paydown | 357 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | avoidance of s. 100 through partnership boot paydown | 357 |
2014 Ruling 2013-0505431R3 - XXXXXXXXXX
In connection with an extensive reorganization, Pubco will transfer its undivided interest in a royalty to a partnership (Partnership D) mostly...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | public trading in dividend recipient does not engage exclusion in s. 55(2)(a)(iv) | 848 |
| Tax Topics - Income Tax Act - Section 66.2 - Subsection 66.2(5) - Canadian development expense - Paragraph (e) | transfer of royalty from partly-owned partnership | 464 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) | delay in filing articles of dissolution | 55 |
4 July 2012 External T.I. 2011-0429601E5 F - Roulement et société de personnes
In order to merge two partnerships (in this case, two partnerships each owned as to 95% and 5% by a husband and wife, respectively, should s....
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| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | two partnerships potentially could be merged by using s. 97(2) followed by s. 98(3), or the reverse | 116 |
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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| 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 96 - Subsection 96(1.01) | s. 96(1.01) inapplicable where only income interest and not capital interest disposed of | 139 |
| 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 |
7 July 2006 Income Tax Severed Letter 2006-0177341R3 - Creation of an income trust
Rulings that the s. 97(2) election was available for various transfers of property to a partnership in consideration for exchangeable LP units.
3 December 2003 External T.I. 2003-0046015 - Amalgamation and Sub. 97(2) Election
Where a predecessor corporation made a transfer to a partnership described in s. 97(2), the amalgamated corporation can file the s. 97(2) election...
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| Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) | 28 |
9 June 2003 External T.I. 2003-0004835 - WHETHER A PARTNERSHIP IS A PERSON
In a s. 97(2) transfer, the partnership is not considered a person related to the taxpayer solely because the taxpayer is a majority interest...
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| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e.2) | 60 |
24 April 2002 External T.I. 2001-0111185 F - DISPOSITION PARTIELLE D'UNE PARTICIPATION
Ms. A is one of the three limited partners in a limited partnership (the "LP"). Her 33 units entitle her to 1/3 of the value of the shares, 3/4 of...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | reclassification of LP units into three classes of alphabet units did not entail a disposition | 183 |
| Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) | all the partner’s units were a single property, so that the disposition of one type of unit engaged s. 43(1) | 229 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | all units of three classes constituted a single property to the limited partner | 158 |
2001 Ruling 2001-0070943 - PARTNERSHIP INTEREST PENSION CORP.
A corporation ("Company A") disposed of a real estate property to a limited partnership in consideration for partnership interest and the...
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| Tax Topics - Income Tax Act - Section 253.1 | 48 | |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | exercise price respected as the proceeds of property subject to NAL option | 57 |
1999 Ruling 9829163 - RELATED GROUP LOSS UTILIZATION SCHEME
Paras. 16 and 19 describe the transfer of beneficial ownership of property by a corporation to new partnerships, with the corporate transferor...
17 November 1999 External T.I. 9901265 - 97(1) AND A RESERVE
"[W]here an individual transfers property to a partnership under subsection 97(2) of the Act and receives, in addition to a partnership interest...
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| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(iii) | 112 |
1999 Ruling 9932263 - PARTNERSHIP REORGANIZATION
A partnership that is a member of a partnership may elect under s. 97(2), as reflected in IT-413R, para. 3.
7 February 1997 External T.I. 9702245 - TRANSFER OF PROPERTY
Pending the completion of a review of the matter, the administrative position on s. 85(1)(b) described at the 1996 Corporate Management Tax...
24 August 1992 T.I. (Tax Window, No. 23, p. 13, ¶2125)
Where a corporation converts a capital property to inventory and transfers it to a partnership under s. 97(2), RC will apply its policy in...
89 C.R. - Q.36
Where an election under s. 97(2) is made indicating that a particular property is capital property, the election will not be considered invalid by...
87 C.R. - Q.5
It is a question of fact whether there is a Canadian partnership immediately after the transaction.
IT-471R "Merger of Partnerships" under "Work in Progress"
Combined use of s. 98(3) wind-ups and s. 97(2) drop-downs to merge Cdn partnerships
1. The Act does not specifically provide for the merger or...
Interpretation Bulletin IT-413R, Election by Members of a Partnership under subsection 97(2), July 7,1989
Transferor taxpayer may itself be a partnership
3. Where the "taxpayer" referred to in subsection 97(2) that disposes of property to a partnership...
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| Tax Topics - Income Tax Act - 101-110 - Section 102 - Subsection 102(2) | 87 |
IT-338R "Partnership Interests - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"
IT-457R "Election by Professionals to Exclude Work in Progress from Income" under "Meaning of 'Work in Progress'"
Forms
T2059 Election on Disposition of Property by a Taxpayer to a Canadian Partnership
Filing instructions (different where co-ownership)
Mail one copy of this election and related schedules (as specified), completed by the...
Articles
M. O'Brien, "The 97(2) Rollover - Basic Rules and New Developments", Business Vehicles, Vol IV, No. 2, 1998, p. 186.
McMullen, "Tax Considerations in the Reorganization of Partnerships", 1994 Corporate Management Tax Conference Report, c. 6.
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(21) | 0 |
Bernstein, "Partnership Versus Joint Company", Tax Profile, March 13, 1990
Discussions of deferred extraction of "boot" from the partnership in light of RC positions on GAAR and partial dispositions; and of partnership...
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| Tax Topics - Income Tax Act - Section 85 - Subsection 85(2) | 28 |
Accounting Pronouncements
CICA Emerging Issues Committee, EIC-28 "Accounting for Assets Contributed to a Joint Venture"
Paragraph 97(2)(b)
Cases
Iberville Developments Limited v. Canada, 2020 FCA 115
The taxpayer (“Iberville”), on three occasions in 2003 and 2004, contributed shopping centres worth $130M to a newly-formed partnership in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 97 - Subsection 97(1) | issuance of partnership units on a drop-down is irrelevant to the ACB of the partnership interest | 470 |
Subsection 97(3) - Election not available — section 88
Administrative Policy
16 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 19, ¶1051)
Where a corporation disposes of property at a loss to a partnership which is owned by its controlling shareholder and his spouse, s. 97(3) will...