A limited partnership with both resident and non-resident partners, but with its central management and control in Canada (so that it was a “Canadian resident partnership” as defined in s. 248(1)) sold a somewhat small (under 5%) shareholding of a US target company on terms that included an earnout. In finding that the partnership would not satisfy various requirements of IT-426R, para. 2 for use of the cost-recovery method, including the requirement of subpara. 2(f) that “[t]he vendor is ... resident in Canada” - CRA stated:
The definition of “Canadian resident partnership” … is not relevant for the application of [subpara. 2(f)] … . Moreover, a limited partnership is not a person resident in Canada for the purposes of the Act (although it is deemed to be a separate person resident in Canada for limited purposes in subsection 96(1)) … .
|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 96 - Subsection 96(1) - Paragraph 96(1)(a)||“Canadian resident partnership” is not a person “resident in Canada” (although it is resident for income computation purposes)||160|