18 October 1990 Administrative Letter 59586 F - Impact of Partnership on Pre-acquisition Losses -- summary under Paragraph 111(5)(a)

Company A, whose losses from Div 1 are streamed due to a previous acquisition of control, transfers Div 1 to a partnership, whose other partner (Company C) transfers two other but similar businesses (Div 2 and Div 3) to the partnership. Since "a corporate partner will normally be considered to be carrying on the business of the partnership of which it is a member", the test in s. 111(5)(a)(i) would normally be considered to be satisfied so that the streamed losses from Div 1 could be deducted by Company A from the income from the similar businesses allocated to it by the partnership. "We would caution, however, that...if the partnership does not, in fact, carry on Div 1 as a separate business from Div 2 and Div 3, the business of the partnership may be a different business from Div 1 previously carried on by Company A."