Principal Issues: General questions with respect to the definitions of "person", "resident", "Canada" and "individual" for purposes of the Act.
Position: General information provided.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Stan Keyes, Minister of National Revenue, has asked me to reply to your letters of December 1, 2003, and March 30, 2004, concerning the definitions of various terms used in the Income Tax Act. I apologize for this delayed response. A letter was mailed to you on January 20, 2004, but it was returned with the notation that the addressee had moved to an unknown address.
Your first question related to who or what qualifies as a person for purposes of the Act. In particular, you asked which of the following types of entities are persons for purposes of the Act and which ones are not:
? a limited liability partnership;
? a limited partnership;
? a partnership;
? a proprietorship;
? an unregistered business name;
? a trust subject to statutory law;
? a private trust created by contract and subject only to the common law;
? an individual;
? a natural person (namely, a man personifying something); and
? a man who is not a natural person (namely, a man who is not personifying anything).
Any partnership, be it a general partnership, limited partnership or limited liability partnership, is not a person for purposes of the Act. It is a flow-through entity. Subsection 96(1) of the Act requires that income and losses be calculated as if the partnership were a separate person resident in Canada, but these amounts are then apportioned to the partners. Each partner reports his or her share of the partnership's income and losses for income tax purposes.
A proprietorship is also not a person for purposes of the Act. The term "proprietorship" in Canadian tax parlance usually refers to a natural person directly carrying on a business. The natural person carrying on the business reports all income and losses from the business. Similarly, an unregistered business name is not a person for purposes of the Act-it is just the name under which a particular business is carried on.
A trust, however created, is generally a person for purposes of the Act with respect to the property of the trust. Subsection 104(2) of the Act deems a trust to be an individual for purposes of the Act with respect to the trust property. Any individual for purposes of the Act is also a person for purposes of the Act. An exception from the general rule for trusts is made in subsection 104(1) for certain trusts that can reasonably be considered to act as agent for all the beneficiaries of the trust with respect to the trust property. Such trusts are not individuals, and therefore are not persons for purposes of the Act.
Black's Law Dictionary, Seventh Edition, defines "natural person" to mean "a human being, as distinguished from an artificial person created by law." An example of a type of artificial person is the corporation. It is unclear to us what you meant by distinguishing between a natural person and a man who is not a natural person. All human beings are natural persons and all natural persons are persons for purposes of the Act.
Your second question asked us to refer you to any legislation or other documents that define the term "resident" for purposes of the Act. The term resident is not defined in the Act or in any related legislation. Residency is defined primarily by common law tests, but there are certain provisions of the Act that may deem a person to be either resident (for example, subsection 250(4) of the Act) or not resident (for example, subsection 250(5) of the Act) in Canada.
A summary of the administrative views of the Canada Revenue Agency and the case law relevant to the residency of natural persons can be found in Interpretation Bulletin IT-221R3, Determination of an Individual's Residence Status. Similarly, the residency of trusts is discussed in Interpretation Bulletin IT-447, Residence of a Trust or Estate; and the residency of corporations in Interpretation Bulletin IT-391R, Status of Corporations. You can find all these interpretation bulletins on our Web site at www.cra.gc.ca.
You have also asked whether the following provinces and territories are included in the definition of Canada for purposes of the Act:
? Alberta
? British Columbia
? Manitoba
? New Brunswick
? Newfoundland and Labrador
? Northwest Territories
? Nova Scotia
? Nunavut
? Ontario
? Prince Edward Island
? Quebec
? Saskatchewan
? Yukon
We can confirm that all of the above provinces and territories are part of Canada for purposes of the Act.
Your last question was whether the entities set out in your first question are individuals for purposes of the Act. The definition of "individual" in subsection 248(1) of the Act states that all persons except corporations are individuals for purposes of the Act. Therefore all the entities above that are persons would also be individuals for purposes of the Act.
We trust that our comments will be of assistance to you in your endeavours. Please do not hesitate to contact us if you require further information.
Yours sincerely,
Stephen Rigby
Assistant Commissioner
Policy and Planning Branch
Ted Cook
946-4165
2004-006987
April 7, 2004