Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether SIFT partnerships are required to make quarterly instalments in accordance with sections 156 and 156.1 of the Act in respect of the tax payable under section 197 of the Act.
Position: Yes.
Reasons: With respect to the tax payable by a SIFT partnership under section 197 of the Act, subsection 197(6) provides that the provisions of section 156 and 156.1 are applicable. Therefore the SIFT partnership is required to remit tax in accordance with sections 156 and 156.1 of the Act.
February 20, 2012
Assessments and Benefit Services Branch HEADQUARTERS
Business Returns Directorate Income Tax Rulings
Business Accounting Systems Section Directorate
Attention: Byron MacDougall Gillian Godson
(613) 957-8981
2011-042273
Instalment Requirements for SIFT Partnerships
We are replying to your inquiry regarding whether a specified investment flow-through ("SIFT") partnership is required under section 156 of the Income Tax Act (the "Act") to remit tax on a quarterly basis should its net tax owing exceed the "instalment threshold" as defined in subsection 156.1(1).
The Act defines a "SIFT partnership" to mean a Canadian resident partnership that, at any time in the taxation year, holds certain property (referred to as "non-portfolio property") and whose securities are listed on a stock exchange or other public market. Section 197 of the Act imposes a tax on certain SIFT partnerships as if they were persons. The tax applies on income from non-portfolio property and on income from carrying on business in Canada.
Pursuant to subsection 197(6) of the Act, certain provisions of Part I of the Act, including sections 156 and 156.1, are applicable to Part IX.1 (Tax on SIFT Partnerships) with any modifications that the circumstances require. Unless the conditions in section 156.1 are met, section 156 of the Act requires an individual to make quarterly tax instalments. Therefore a SIFT partnership would be required to make quarterly tax instalments where its net tax owing exceeds the instalment threshold.
It should be noted that the July 20, 2011, Finance Canada News Release announced the proposal to amend the instalment requirements such that SIFTs would be required to make monthly instalments for taxation years that begin after July 20, 2011.
Should you have any questions or require additional information, please do not hesitate to contact Gillian Godson at the number provided above.
Yours truly,
Terry Young, CA
For the Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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