Income Tax Act — I-3.3 96
General Rules 96 (1) Where a taxpayer is a member of a partnership, the taxpayer’s income, non-capital loss, net capital loss, restricted farm loss and farm loss, if any, for a taxation year, or the taxpayer’s taxable income earned in Canada for a taxation year, as the case may be, shall be computed as if (a) the partnership were a separate person resident in Canada; (b) the taxation year of the partnership were its fiscal period; (c) each partnership activity (including the ownership of property) were carried on by the partnership as a separate person, and a computation were made of the amount of (i) each taxable capital gain and allowable capital loss of the partnership from the disposition of property, and (ii) each income and loss of the partnership from each other source or from sources in a particular place, for each taxation year of the partnership; (d) each income or loss of the partnership for a taxation year were computed as if (i) this Act were read without reference to sections 34.1 and 34.2, subsection 59(1), paragraph 59(3.2)(c.1) and subsections 66.1(1), 66.2(1) and 66.4(1), and (ii) no deduction were permitted under any of section 29 of the Income Tax Application Rules , subsection 65(1) and sections 66, 66.1, 66.2, 66.21 and 66.4; (e) each gain of the partnership from the disposition of land used in a farming business of the partnership were computed as if this Act were read without reference to paragraph 53(1)(i); (e.1) the amount, if any, by which (i) the total of all amounts determined under paragraphs 37(1)(a) to 37(1)(c.1) in respect of the partnership at the end of the taxation year exceeds (ii) the total of all amounts determined under paragraphs 37(1)(d) to 37(1)(g) in respect of the partnership at the end of the year were deducted under subsection 37(1) by the partnership in computing its income for the year; (f) the amount of the income of the partnership for a taxation year from any source or from sources in a particular place were the income of the taxpayer from that source or from sources in that particular place, as the case may be, for the taxation year of the taxpayer in which the partnership’s taxation year ends, to the extent of the taxpayer’s share thereof; and (g) the amount, if any, by which (i) the loss of the partnership for a taxation year from any source or sources in a particular place, exceeds (ii) in the case of a specified member (within the meaning of the definition specified member in subsection 248(1) if that definition were read without reference to paragraph (b) thereof) of the partnership in the year, the amount, if any, deducted by the partnership by virtue of section 37 in calculating its income for the taxation year from that source or sources in the particular place, as the case may be, and (iii) in any other case, nil were the loss of the taxpayer from that source or from sources in that particular place, as the case may be, for the taxation year of the taxpayer in which the partnership’s taxation year ends, to the extent of the taxpayer’s share thereof. Income allocation to former member (1.01) If, at any time in a fiscal period of a partnership, a taxpayer ceases to be a member of the partnership (a) for the purposes of subsection (1), sections 34.1, 101 and 103 and paragraph 249.1(1)(b), and notwithstanding paragraph 98.1(1)(d), the taxpayer is deemed to be a member of the partnership at the end of the fiscal period; and (b) for the purposes of the application of paragraph (2.1)(b), subsection 40(3.12) and subparagraphs 53(1)(e)(i) and (viii) and (2)(c)(i) to the taxpayer, the fiscal period of the partnership is deemed to end (i) immediately before the time at which the taxpayer is deemed by subsection 70(5) to have disposed of the interest in the partnership, where the taxpayer ceased to be a member of the partnership because of the taxpayer’s death, and (ii) immediately before the time that is immediately before the time that the taxpayer ceased to be a member of th