Principal Issues: 1) Whether the election under paragraph 34(a) applies to a corporation that becomes a member of the partnership the last day of the taxation year that begins before March 22, 2017, if the partnership so elects under paragraph 34(a) to exclude work in progress from the calculation of its income for that taxation year. 2) Whether the answer would be the same if the corporation becomes a member of the partnership the first day of the subsequent taxation year.
Position: 1) Yes, application of the Act. 2) Yes, based on paragraph 34(b).
Reasons: 1) It is proposed to repeal section 34, effective January 1st 2020. For the taxation year that includes March 22, 2017, a taxpayer may elect to not include the work in progress in its income for that year. For the application of section 34, a partnership is considered to be a taxpayer. Subsection 96(3) provides the conditions for an election to be valid for all the members of a partnership. If all the conditions are met, each member of the partnership shall be deemed to have made the election. 2) Under paragraph 34(b), an election is valid for all subsequent taxation years unless the taxpayer, with the concurrence of the Minister, revokes the election.
