Principal Issues: Whether the Minister may reassess the member ("XCO") of a partnership directly in respect of its allocated share of income of the partnership pursuant to subsection 152(4) of the Act, without making (or if the Minister is unable to make) a determination in respect of the partnership under subsection 152(1.4) of the Act and without making an assessment under subsection 152(1.7) of the Act.
Position: Yes. However, such a reassessment pursuant to subsection 152(4) of the Act could only be made after XCO's normal reassessment period in the situations described in paragraphs 152(4)(a) and (b). Furthermore, such a reassessment under subsection 152(4) concerning XCO would not affect or be binding on the other members of the partnership.
Reasons: Wording of the Act and previous positions.
February 2, 2005
| Technical Interpretations Services | Income Tax Rulings Directorate |
| Montreal Tax Services | |
| 305 René-Lévesque Blvd. West | S. Prud'Homme |
| Montreal QC H2Z 1A6 | (613) 957-8975 |
| Attention: Mr. Marc Lemyre | |
| 2005-011196 |
Request for Opinion - Subsections 152(1.4), 152(1.7) and 152(4) of the Income Tax Act
This is in response to your email of January 18, 2005, in which you requested our opinion regarding the application of subsection 152(4) and subsections 152(1.4) et seq. of the Income Tax Act (the "Act") in a particular situation.
Unless otherwise indicated, all references to a statutory section or included provision in this letter are to a section of the Act or one of its provisions.
(1) Particular Situation
You have presented us with the situation described below (the "Particular Situation") as part of your request for an opinion.
(a) A corporation ("XCO") was a general partner of a limited partnership ("BCOM").
(b) The latest date by which the Minister could make a determination at the BCOM level for its 2001 fiscal year pursuant to subsection 152(1.4) was February 28, 2005.
(c) The normal reassessment period, as defined in subsection 152(3.1), applicable to XCO for its taxation year in which BCOM's 2001 fiscal period ended (the "Particular Taxation Year"), would expire on April 25, 2005.
(2) Your question respecting the particular situation
You requested our opinion on the application of section 152(4) and sections 152(1.4) et seq. in the Particular Situation.
Specifically, you wish to know whether, in the Particular Situation, the Minister may reassess pursuant to subsection 152(4) at the level of the XCO general partner, in respect of the tax that would be payable by XCO for the particular Taxation Year, in order to, inter alia, modify the amount of its share of the income of BCOM, without the Minister making a determination at the level of BCOM pursuant to subsection 152(1.4) and assessing the partners of BCOM pursuant to paragraph 152(1.7)(b).
(3) Our comments on the Particular Situation
We are of the view that, in the Particular Situation, the Minister could reassess pursuant to subsection 152(4) at the level of the XCO general partner, in respect of the tax that would be payable by XCO for the Particular Taxation Year, in order to, inter alia, modify the amount of its share of the income from BCOM that was included in the computation of its income. The Minister could reassess pursuant to subsection 152(4) at the level of the XCO general partner in such circumstances without a determination being made at the level of BCOM pursuant to subsection 152(1.4), and without assessments at the level of BCOM partners being made pursuant to paragraph 152(1.7)(b). The Minister could also reassess pursuant to subsection 152(4) at the XCO general partner level in the above circumstances even if the time limit for making a determination at the BCOM level pursuant to subsection 152(1.4) had expired.
Of course, a reassessment could not be made pursuant to subsection 152(4) in respect of XCO in the circumstances described above after the expiry of the normal reassessment period in the circumstances described in paragraphs 152(4)(a) (which includes the filing by the taxpayer of a waiver of the application of the normal reassessment period) and 152(4)(b).
In addition, a reassessment pursuant to subsection 152(4) in respect of XCO would apply only to that partner, and would not affect or bind any other partner of BCOM.
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
Should you require further information on this subject, please do not hesitate to contact us.
Stéphane Prud'Homme, Notary, M.Fisc.
For the Director
Corporate Reorganizations and Resource Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch