D. Watson (613)957-8960
May 4, 1988
Dear Sir/Madam:
This is in response to your letter of March 25, 1988, in which you requested our opinion on the application of subsection 207.6(2) of the Income Tax Act (the "Act") to a hypothetical situation. We are of the opinion that the nature of a relationship between two parties and the character of an agreement between them can only be determined after a thorough examination of the specific facts. The hypothetical situation described in your letter lacks sufficient detail to allow such a determination.
Nevertheless, we are able to confirm the general statement that subsection 207.6(2) of the Act applies to an employer/employee relationship and that it does not apply to an arrangement between a partner and a partnership.
While we hope our comments are of assistance to you they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.
Yours truly,
for Director Financial Industries Division Rulings Directorate