Income Tax Regulations — 5102
5102 (1) For the purpose of this Part, a partnership is a small business investment limited partnership at any particular time if at all times after it was formed and before the particular time (a) it had only one general partner; (b) the share of the general partner, as general partner, in any income of the partnership from any source in any place, for any period, was the same as his share, as general partner, in (i) the income of the partnership from that source in any other place, (ii) the income of the partnership from any other source, (iii) the loss of the partnership from any source, (iv) any capital gain of the partnership, and (v) any capital loss of the partnership for that period, except that the share of the general partner, as general partner, in the income or loss of the partnership from specified properties may differ from his share, as general partner, in the income or loss of the partnership from other sources; (c) the share of the general partner, as general partner, in any income or loss of the partnership for any period was not less than his share, as general partner, in the income or loss of the partnership for any preceding period; (d) the interests of the limited partners were described by reference to units of the partnership that were identical in all respects; (e) no limited partner or group of limited partners who did not deal with each other at arm’s length held more than 30 per cent of the units of the partnership and, for the purposes of this paragraph, (i) a small business investment corporation that has not borrowed money and in which no shareholder or group of shareholders who did not deal with each other at arm’s length held more than 30 per cent of the outstanding shares of any class of voting stock shall be deemed not to be a limited partner, and (ii) the general partner shall be deemed not to hold any unit of the partnership as a limited partner; (f) its only undertaking was the investing of its funds and its investments consisted solely of (i) small business securities where, except as provided in subsection 5104(1), the partnership was the first person (other than a broker or dealer in securities) to have acquired the securities and it has owned the securities continuously since they were so acquired, (ii) property (other than a small business security) that is (A) a share of the capital stock of a corporation (other than a share that is issued to the partnership and that is either a share described in section 66.3 of the Act or a share in respect of which an amount has been designated under subsection 192(4) of the Act), or (B) a put, call, warrant or other right to acquire or sell a share described by clause (A), (iii) specified properties, or (iv) any combination of properties described in any of subparagraphs (i) to (iii); (g) it has complied with subsection (2); (h) it has not borrowed money except for the purpose of earning income from its investments and the amount of any such borrowings at any time did not exceed 20 per cent of the partnership capital at that time; and (i) it has not accepted deposits. (2) The aggregate of the cost amounts to a small business investment limited partnership of small business securities held by it at any time shall not be less than the amount, if any, by which the aggregate of (a) 25 per cent of the amount, if any, by which (i) the aggregate of all amounts received by it more than 12 months before that time and not more than 24 months before that time as consideration for the issue of its units or in respect of its units exceeds (ii) the aggregate of all amounts paid by it before that time to its members and designated by the partnership as a return of the consideration referred to in subparagraph (i), (b) 50 per cent of the amount, if any, by which (i) the aggregate of all amounts received by it more than 24 months before that time and not more than 36 months before that time as consideration for the issue of its units or in respect of its units ex