Words and Phrases - "return of income"
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(e) - that “[t]he vendor submits, with his return of income for the year in which the shares were disposed of, a copy of the sale agreement” - CRA stated:
… T5013 forms … do … not constitute a return of income for the purpose of [subpara. 2(e)] … .
|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 Act - Section 248 - Subsection 248(1) - Canadian Resident Partnership||“Canadian resident partnership” is not a person “resident in Canada”||143|
|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|