2004 Ruling 2004-0084311R3 - Incorporating a Partnership -- summary under Personal Services Business

A professional partnership is converted to a Canadian-controlled private corporation ("Newco") pursuant to ss.85(2) and (3) and former partners provide professional services to the professional partnership, through corporations controlled by them (the "contracting companies"), with the resulting fees paid by Newco reducing its income to below the business limit. Ruling that provided that partners providing professional services to Newco through contracting companies would not, but for the existence of the contracting companies, be officers or employees of Newco in respect of those professional services, the contracting companies will not be considered to be carrying on personal services businesses.