28 April 2005 External T.I. 2005-0117561E5 - transfer of partnership interest

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Tax implications of transfer of partnership interest.

Position: None.

Reasons: Too general - should request advance ruling if definite proposal.

2005-011756
XXXXXXXXXX B.G. Dodd
(613) 957-8953
April 28, 2005

Dear XXXXXXXXXX:

Re: Interpretation Bulletin IT-338R2

We are writing in reply to your request dated February 21, 2005 concerning the status of IT-338R2 as well as the transfer of partnership interests.

IT-338R2 has not been cancelled but rather, is one of a number of interpretation bulletins that have been archived. Archived bulletins include those that are no longer relevant due to changes in the law or changes in our interpretation of the law, as well as those that are seldom used, either because the subject matter is covered in other CRA publications or because the information presented is no longer of interest. The archiving of old and outdated bulletins allows us to concentrate on revising those which are of more general, continuing interest to the public. Archived bulletins are still accessible on our web site given that some of the information may have important historical value. However, caution should be used when referring to these documents, as the provisions or policies they discuss may no longer be in force.

With respect to the tax implications in the case of a partner wishing to transfer his or her partnership interest to his or her son at a value of nil, this is a matter on which we can offer little comment. We do not provide information which is in the nature of tax advice or tax planning. Given the possible complexity of the legal and tax issues involved, you may wish to consult with an independent legal and/or tax professional. However, if you have any specific interpretative concerns relating to the particular provisions of the Income Tax Act which you believe to be applicable, we would be pleased to consider these.

In the event you are concerned with a specific fact situation involving an actual proposal which is being seriously contemplated, confirmation of the tax implications can be

provided but only in the context of an advance income tax ruling request. A fee is charged for this service. The process would involve, among other things, a review of the particular partnership agreement and other relevant documents, the background facts, the specific circumstances of the proposed transfer and related transactions and your analysis of the applicable provisions of the Income Tax Act. Should you wish to pursue this avenue, the procedures to be followed are described in Information Circular 70-6R5 which can be found on our website at www.cra.gc.ca.

We hope this will be of assistance.

Yours truly

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate