Canadian-resident family members of a family own shares in 3 holding companies, Holdco #1, Holdco #2 and Holdco #3, which hold partnership interests in four partnerships each holding a commercial rental building. The partnership employs directly in its business throughout the taxation year more than 5 full-time employees. CRA stated:
[T]he determination of whether a corporation's share of the business income of a partnership is from an active business is made at the partnership level. Paragraph 20 of IT-73R6 … indicates that the CRA considers a business carried on by a corporation as a member of a partnership not to be a SIB if the partnership employs more than five full-time employees, and that, accordingly, the corporation's share of the income from the business can be included in the calculation of its "specified partnership income" ("SPI"). Therefore, in our view, the business carried on by each of Holdco #1, Holdco #2 and Holdco #3 as a member of the partnership… is not a SIB because the partnership employs in its business more than 5 full-time employees.