Words and Phrases - "return of income"

76
38
66
45
31
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16
10
68
2
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30
48
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75
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2

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

T5013 return is not a 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)] … .

Words and Phrases
return of income
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