Is an individual taxpayer who is a member of a U.S. partnership (“Partnership”) and who immigrated to Canada during a taxation year, thereby becoming a Canadian resident, required to report a capital gain realized by the Partnership from a disposition of U.S. real property occurring prior to the taxpayer becoming a resident of Canada? CRA responded:
[T]he computation and allocation of the partnership’s income (including capital gains) to the members is made at the end of the partnership’s fiscal period.
… [T]he capital gain was realized by the Partnership sometime in 2015 and allocated to the Taxpayer at the end of 2015 when the Taxpayer was a resident in Canada. Therefore, pursuant to section 114, the income of the Partnership, including the capital gain realized by the Partnership, must be reported by the Taxpayer on the Taxpayer’s 2015 Canadian income tax return.
… [W]hile addressing the importation of losses into Canada, subsection 96(8) does not prevent the recognition of gains in Canada.