Chapter History S4-F16-C1, What is a Partnership?

Introduction

The purpose of this Chapter History page is to highlight any amendments to the information contained in an interpretation bulletin that is now reflected in a chapter of an income tax folio as well as to identify any subsequent amendments to a folio chapter. It outlines amendments that have been made as a result of legislative changes and proposed legislative changes, precedential court decisions, as well as new or revised interpretations of the Canada Revenue Agency (CRA).

Update November 26, 2015

Minor changes have been made to improve the usability of the income tax folios:

• the Summary section has been moved to the top of each folio chapter to be more immediately visible and helpful to readers;
• the Application and Reference sections have been moved to the end of the Chapter which is more appropriate for administrative content of this nature.  However, these sections now appear in the Table of contents for easy access;
• the statement that folios are only available in electronic format has been moved to the end of the Application section; and
• the words “as promulgated under the Act” in connection with the Income Tax Regulations have been removed from the Application section, in the interest of using plain language.

Update May 5, 2015

General

Income Tax Folio S4-F16-C1, What is a Partnership? replaces and cancels Interpretation Bulletin IT–90, What is a Partnership?

In addition to consolidating the content of the former interpretation bulletin, general revisions have been made to improve readability. Any substantive technical and interpretive changes to the information outlined in the former interpretation bulletin are described below. Except as otherwise noted, all statutory references herein are references to provisions of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.), as amended. All references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, under the Income Tax Act.

Legislative and other changes

¶1.1 (formerly included in paragraph 2 of IT-90) clarifies that the meaning of a partnership is defined under provincial and territorial partnership statutes.

¶1.2 -1.3 have been added to reflect the principle laid out in Continental Bank, Backman and Spire Freezers that reference must be made to provincial or territorial law when determining whether a partnership exists.

¶1.5 includes new information in the first bullet, which was added to reflect the rule set out in the partnership statutes of the common law provinces and territories that an incorporated company or association is not a corporation.

¶1.7 -1.14 have been added to reflect principles laid out by the Supreme Court of Canada in one or more of the decisions in Continental Bank, Backman and Spire Freezers for purposes of determining whether a partnership exists.

¶1.15 (formerly included in paragraph 5 of IT-90) clarifies the principle that in law, partners are jointly and severally liable for the debts incurred by a partnership.

¶1.17 has been added to reflect principles laid out by the Supreme Court of Canada in Backman and Spire Freezers concerning the determination of whether a new partner has entered a valid partnership.

¶1.18 has been added to include the definition of a contract of partnership as set out in the Civil Code of Quebec.

¶1.19 has been added to confirm that a joint venture is not defined in the Act and must be determined by reference to provincial and territorial law.

¶1.20 has been added to outline three distinctive requirements of a joint venture as laid out by the Tax Court of Canada in Woodlin Developments Ltd.

¶1.21 has been added to set out principle that a joint venture is not recognized under the Act and thus cannot have a separate fiscal period or deduct CCA.

¶1.22 (formerly included in paragraph 4 of IT-90) clarifies that a partnership may only claim CCA for property held under joint tenancy or tenancy in common.