Income Tax Act — I-3.3 96
axpayer 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 the partnership, in any other case. Allocation of share of income to retiring partner (1.1) For the purposes of subsection 96(1) and sections 34.1, 34.2, 101, 103 and 249.1, (a) where the principal activity of a partnership is carrying on a business in Canada and its members have entered into an agreement to allocate a share of the income or loss of the partnership from any source or from sources in a particular place, as the case may be, to any taxpayer who at any time ceased to be a member of (i) the partnership, or (ii) a partnership that at any time has ceased to exist or would, but for subsection 98(1), have ceased to exist, and either (A) the members of that partnership, or (B) the members of another partnership in which, immediately after that time, any of the members referred to in clause 96(1.1)(a)(ii)(A) became members have agreed to make such an allocation or to the taxpayer’s spouse, or common-law partner, estate or heirs or to any person referred to in subsection 96(1.3), the taxpayer, spouse, or common-law partner, estate, heirs or person, as the case may be, shall be deemed to be a member of the partnership; and (b) all amounts each of which is an amount equal to the share of the income or loss referred to in this subsection allocated to a taxpayer from a partnership in respect of a particular fiscal period of the partnership shall, notwithstanding any other provision of this Act, be included in computing the taxpayer’s income for the taxation year in which that fiscal period of the partnership ends. Deemed dividend of SIFT partnership (1.11) If a SIFT partnership is liable to tax for a taxation year under Part IX.1, (a) paragraph (1)(f) is to be read as if the expression “the amount of the income of the partnership for a taxation year from any source or from sources in a particular place” were read as “the amount, if any, by which the income of the partnership for a taxation year from any source or from sources in a particular place exceeds, in respect of each such source, the portion of the partnership’s taxable non-portfolio earnings for the taxation year that is applicable to that source”; and (b) the partnership is deemed to have received a dividend in the taxation year from a taxable Canadian corporation equal to the amount by which the partnership’s taxable non-portfolio earnings for the taxation year exceeds the tax payable by the partnership for the taxation year under Part IX.1. Disposal of right to share in income, etc. (1.2) Where in a taxation year a taxpayer who has a right to a share of the income or loss of a partnership under an agreement referred to in subsection 96(1.1) disposes of that right, (a) there shall be included in computing the taxpayer’s income for the year the proceeds of the disposition; and (b) for greater certainty, the cost to the taxpayer of each property received by the taxpayer as consideration for the disposition is the fair market value of the property at the time of the disposition. Deductions (1.3) Where, by virtue of subsection 96(1.1) or 96(1.2), an amount has been included in computing a taxpayer’s income for a taxation year, there may be deducted in computing the taxpayer’s income for the year the lesser of (a) the amount so included in computing the taxpayer’s income for the year, and (b) the amount, if any, by which the cost to the taxpayer of the right to a share of the income or loss of a partnership under an agreement referred to in subsection 96(1.1) exceeds the total of all amounts in respect of that right that were deductible by virtue of this subsection in computing the taxpayer’s income for previous taxation years. Right deemed not to be capital property (1.4) For the purposes of this Act, a right to a share of the income or loss of a partnership under an agreeme