A parent donates money to the parent’s adult children, who jointly invest those amounts in a family partnership newly-formed by them, with income being distributed and allocated to each in proportion to the respective amounts invested. Could s. 103(1.1) apply? CRA responded:
Determining a reasonable allocation of income of a partnership among non-arm's length partners for the purposes of subsection 103(1.1) is a question of fact that depends on the circumstances of each case.
Thus, it appears to us that in your example, subsection 103(1.1) could apply even if the partnership agreement provides for a prorated share of the amounts invested by each partner.