In 2012-0470921E5 (released August 21, 2013), the CRA’s Rulings Directorate said the addition of a new partnership to an existing chain of partnerships means that all the partnerships would thereafter have a December 31 year end. In the case considered, the existing group contained a multi-tier partnership (the multi-tier group) that had elected a common fiscal period ending on May 31. A new partnership was later formed by one of the existing partnerships (which held a 90% interest in the new partnership) and another corporation (which held the other 10%). The question was whether the new partnership could have its fiscal period end on May 31. The answer was no. The CRA confirmed that s. 249.1(1)(c) would cause the new partnership’s fiscal period to end on December 31. In addition, the multi-tier group would thereafter fail the requirement for a multi-tier alignment election in s. 249.1(9)(a). The reason is the new partnership was now part of the multi-tier group, and the fiscal period of all the partnerships must end on the same day. Accordingly, under to s. 249.1(1)(c) the fiscal period of all the partnerships would end on December 31.
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CRA says multi-tier partnership alignment election fails when new partnership added
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