"27 Goodmans partners among the leading Canadian lawyers." - Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada
Goodmans Publications

Partnership Withdrawal Creates a Paragraph 12(1)(l.1) Anomaly

November-1-2015

Lawyer Kabir Jamal
Area Tax

Summary

Article originally published in the Canadian Tax Focus, Volume 5, Number 4, November 2015

Excerpt from "Partnership Withdrawal Creates a Paragraph 12(1)(l.1) Anomaly":

The CRA has confirmed (in TI 2015-0567811E5, July 28, 2015) that partners that withdraw from a partnership before the partnership’s fiscal year-end may have a paragraph 12(1)(l.1) income inclusion, even if none of the partnership’s income for the fiscal year is allocated to them. This anomalous result can occur when a corporation or trust withdraws before fiscal year-end from a partnership that has outstanding debts to specified non-residents. Timing the withdrawal to coincide with the fiscal year-end can avoid this problem.

Click here to read the full article.