In order to incentivize its researchers, a university gives its researchers the right to receive 50% of the net income arising from the commercialization of intellectual property developed by them in the course of their employment. However, the university assigns its rights to the intellectual property to its limited partnership for exploitation of such IP. What is the tax treatment of a lump sum received by the university researchers on the limited partnership plan the partnership transfers IP to another related third party?
CRA indicated that the answer to this question would depend on a detailed factual review which could only be performed in the context of responding to a ruling request or on an audit.