QUESTION #46 - DEEMED DISPOSITION OF PARTNERSHIP INTEREST
How does Revenue Canada propose to deal with the decision in Stursberg v. MNR [ 90 DTC 1159]? Will a partner of a partnership be subject to tax when there is a change in partnership interest holding? In particular, will the Department consider annual changes in the percentage interests of partners in accounting and legal partnerships to be partial dispositions of their interests?
DEPARTMENT'S POSITION
The Tax Court of Canada applied the law concerning substance and form in finding that the appellant sold an interest in a partnership to a third party. Accordingly, this case may be relevant where the form and the substance of the transactions under review do not coincide. However, it is not possible to provide any general guidance on areas of possible application because it is the specific circumstances that are determinative in each case. The taxpayer has appealed this decision to the Federal Court.
CTF November 1990 A.Y. Ho Section 22