Principal Issues: What is the filing deadline of an individual who is a limited partner of a partnership that does not include a rental or farming operation and is not a tax shelter investment?
Position: The filing deadline is June 15 of the following year.
Reasons: In accordance with subparagraph 150(1)(d)(ii) of the ITA, the filing due date for individuals who carried on a business in the year, other than through tax shelter investments, is June 15 of the following year. In the court cases Robinson 98 DTC 6232 (FCA) and Grocott 96 DTC 1025 (TCC), the courts held that limited partners and non-active partners of an active partnerships are still considered to have carried on a business in the year regardless of the particular partners' risk or involvement.
D Tiu XXXXXXXXXX (613) 957-8961 2006-018375 May 31, 2006
XXXXXXXXXX:
Re: Filing Deadline of Limited Partners of Partnerships
that are not Tax Shelter Investments
We are writing in response to your April 26, 2006 inquiry on the above subject and further to our subsequent telephone discussions (XXXXXXXXXX/Tiu). You inquired as to what would be the filing deadline of an individual who is a limited partner of a XXXXXXXXXX limited partnership that does not include a rental or farming operation and is not a tax shelter investment.
Written confirmation of the tax consequences inherent in a particular transaction or series of transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. In any event, a request cannot be considered for a ruling when the transactions are completed or where the issues involved are primarily questions of fact. Notwithstanding the foregoing, we are prepared to provide the following general comments.
In accordance with subparagraph 150(1)(d)(ii) of the Income Tax Act ("the Act"), the filing due date for individuals who carried on a business in the year, other than through tax shelter investments, is June 15 of the following year. In the court cases Robinson 98 DTC 6232 (FCA) and Grocott 96 DTC 1025 (TCC), the courts held that limited partners and non-active partners of an active partnership are still considered to have carried on a business in the year regardless of the particular partners' risk or involvement.
In response therefore to your inquiry, if an individual is a limited partner of a limited partnership that does not include a rental or farming operation and is not a tax shelter investment, the individual's filing deadline is June 15 of the following year. We would remind you that all taxes payable remained due on or before April 30.
In connection with your concerns about using line 122 of the T1 return to report the net partnership income (loss) of a limited partner of a partnership that does not include a rental or farming operation and is not a tax shelter investment, we can confirm that changes have been initiated to ensure that individuals with a June 15 filing due-date will not be assessed as if their filing due-date were April 30. The T1 General Income and Benefit Guide and the Reference Manual of our Client Services Group will also be updated accordingly.
In the interim, should your client encounter a late filing penalty associated with the current application of line 122, we recommend that your client promptly submit a T1 adjustment request to reverse such penalty, where appropriate, attaching a copy of this letter.
We trust that the foregoing is satisfactory.
Yours truly,
Robin Maley
Section Manager
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch