Partner B (a corporation) is assessed under s. 103 on the basis that 40% rather than 10% of the income of the LP should have been included in its income (so that the share of Partner A, who is a related individual, should have been 60% rather than 90%). Is the income allocated to B required to be reimbursed by the taxpayer (i.e., A) who received the income? CRA stated:
[S. 103 does] not provide for a reimbursement obligation by a taxpayer where a benefit was allocated or where income was attributed to another taxpayer. …
[I]f under civil law or common law, as applicable, partner A did not obtain a loan nor become the debtor of the partnership or of partner B by reason of distributions in favour of partner A under the partnership agreement, the conditions for the application of subsection 15(2)…would not be satisfied. …[T]here is not enough information to reach a conclusion as to the application of subsection 15(1)… .