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  • Date: 8/19/2014

Corporate Partnerships - Finance Agrees to "Fix" For New Multi-Tier Partnerships 

Canadian Tax Adviser

 

August 19, 2014

 

Julia Clarkson
Ottawa, Canadian Corporate Tax

In a recent comfort letter, Finance states that it will recommend legislative amendments to allow a multi-tier corporate partnership structure that adds one or more new wholly owned partnerships to retain its aligned non-calendar year fiscal period for all of the partnerships (including the new partnerships). The taxpayer was concerned that, in this situation, creating new partnerships would automatically cause the expanded partnership group to have a December 31 fiscal period under paragraph 249.1(1)(c) of the Act.

 

Facts
Opco is part of a multi-tier partnership group for which each partnership has aligned its fiscal period to a day other than December 31 (say, June 30). The partnership group wants to create two wholly owned partnerships (Partnership 3 and 4) with the same fiscal period as the group (June 30).

 

Legislative issue
The taxpayer is concerned that creating this new partnership would technically force the expanded partnership group to have a December 31 fiscal period under paragraph 249.1(1)(c).

 

The taxpayer argues that the purpose of the corporate partnership deferral rules in sections 34.2 and 249.1 of the Act is to minimize tax deferral and that the partnership group's plan to create two wholly owned partnerships with the same fiscal period as the group is not inconsistent with this policy.

 

Comfort letter request
At issue is whether the fiscal period rules in section 249.1 of the Act may be amended to allow a multi-tier corporate partnership structure to retain its aligned non-calendar year fiscal period.

 

Comfort letter response
Finance states that it will recommend the suggested legislative amendments to the Minister of Finance to allow a multi-tier corporate partnership structure, to retain its aligned non-calendar year fiscal period in this situation (June 30, in our example).

 

Finance said it will recommend that this change would apply to new partnerships created after March 2014.

 

For more information, contact your KPMG adviser.

 


 

Information is current to August 19, 2014. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

 

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