| 19(1) | File No. 5-8740 |
| Maureen Shea-DesRosierss | |
| (613) 957-8953 |
November 15, 1989
Dear Sirs:
Re: Paragraph 5102(1)(f) of the Income Tax Regulations (the "Regulations")
This is in reply to your letter of September 20, 1989 concerning the application of paragraph 5102(1)(f) of the Income Tax Act.
Section 5102 of the Regulations in its preamble states "a partnership is a small business investment limited partnership ("SBILP") at any time if at all times after it was formed and before that time" (our underlining) it met the conditions listed at paragraphs (a) to (i) inclusive. Therefore to qualify as a SBILP, the conditions mentioned in paragraph 5102(1)(f) of the Regulations must be met as well as all the conditions listed in paragraphs 5102(a) to (i) of the Regulations at all times after the partnership was formed and before that time.
It is our view that the investment by a SBILP in a property not described in paragraph 5102(1)(f) of the Regulations would not cause the partnership to lose its qualification as a SBILP prior to that time, notwithstanding that the possibility of an investment in such a property was anticipated from the formation of the partnership.
Since such a situation is a question of fact, each particular case would have to be studied on its own merit to determine the application of section 5102 of the Regulations.
It should be noted that once the partnership has lost its qualification as a SBILP it can never gain it back.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate