Principal Issues: Whether the share of the profits allocated to a partner from a partnership qualifies as "qualifying revenue" for the purpose of the CEWS.
Position: No
XXXXXXXXXX 2021-087894
December 12, 2022
Dear Sir,
Subject: SSUC - the concept of "qualifying revenue”
This letter is in response to your question regarding the Canada emergency wage subsidy ("CEWS") pursuant to section 125.7 of the Income Tax Act (the "Act").
Specifically, you asked whether the share of profits allocated to a member of a partnership qualifies as "qualifying revenue" under subsection 125.7(1) of the Act for CEWS purposes.
All legislative references in this letter are to the provisions of the Act.
Our Comments
This technical interpretation provides general comments on provisions contained in the Act and other related legislation, where applicable. It is not intended to confirm the tax treatment of any particular situation involving a particular taxpayer, but rather to assist you in determining that treatment.
The concept of “qualifying revenue" is defined in subsection 125.7(1) as, subject to certain exceptions, the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity — generally from the sale of goods, the rendering of services and the use by others of resources of the eligible entity — in Canada in the particular period.
We are of the view that a member's share of the profits of a partnership, as allocated to the member pursuant to subsection 96(1) and in accordance with the partnership agreement, is not "qualifying revenue" to the member within the meaning of that definition in subsection 125.7(1).
We hope that our comments are of assistance.
Best regards,
Isabelle Landry
Manager
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch