Income Tax Act — I-3.3 (a)
specified partnership income of a corporation for a taxation year means the amount determined by the formula A + B where A is the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member, or a designated member, in the year equal to the least of (a) the total of all amounts each of which is an amount in respect of an active business carried on in Canada by the corporation as a member, or a designated member, of the partnership determined by the formula G – H where G is the total of all amounts each of which is (i) the corporation’s share of the income (determined in accordance with Subdivision J of Division B) of the partnership for a fiscal period of the business that ends in the year, (ii) income of the corporation for the year from the provision (directly or indirectly, in any manner whatever) of services or property to the partnership, or (iii) an amount included in the corporation’s income for the year in respect of the business under any of subsections 34.2(2), (3) and (12), and H is the total of all amounts deducted in computing the corporation’s income for the year from the business (other than amounts that were deducted in computing the income of the partnership from the business or the income of the corporation described under subparagraph (ii) of the description of G) or in respect of the business under subsection 34.2(4) or (11), (b) an amount equal to (i) if the corporation was a member of the partnership, the corporation’s specified partnership business limit for the year, and (ii) if the corporation was a designated member of the partnership, the total of all amounts assigned to it under subsection (8) for the year and, where no such amounts have been assigned, nil, and (c) nil, if (i) the corporation is a member, or a designated member, of the partnership (including indirectly through one or more other partnerships) in the year, and (ii) the partnership provides services or property to either (A) a private corporation (directly or indirectly in any manner whatever) in the year, if (I) the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and (II) it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to 1 persons (other than the private corporation) that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or 2 partnerships with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, or (B) a particular partnership (directly or indirectly in any manner whatever) in the year, if (I) the corporation (or one of its shareholders) does not deal at arm’s length with the particular partnership or a person that holds a direct or indirect interest in the particular partnership, and (II) it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to 1 persons that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or 2 partnerships (other than the particular partnership) with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and B is the lesser of (a) the total of the amounts determined in respect of the corporation for the year under subparagraphs 125(1)(a)(iii) and 125(1)(a)(iv), and (b) the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member, or a designated member, in