2016-0640321I7 Subsections 152(1.5) and 244(20)

Principal Issues: Does subsection 244(20) apply for the purposes of subsection 152(1.5)?

Position: Yes.

Reasons: Textual, contextual and purposive application of the Act.

Author: Larochelle, Sophie
Section: 152(1.5); 244(20)

                                                                                                                            October 18, 2016

Marius Patras                                                                                                      HEADQUARTERS
Senior Program Officer                                                                                       Income Tax Rulings
Compliance Program Branch                                                                              Directorate
112 Kent St., Place de Ville                                                                                 Sophie Larochelle
Ottawa, ON, K1A 0L5

                                                                                                                            2016-064032

      Interaction of subsections 152(1.5) and 244(20)

We are writing in reply to one aspect of the questions you posed to us in your emails of April 2016, that which asks us whether the presumption found in subsection 244(20) of the Income Tax Act (the “Act”) supersedes subsection 152(1.5) with respect to the Minister of National Revenue’s (the “Minister”) obligation to send a notice of determination to each person who was a member of a partnership during the fiscal period covered by a notice of determination in respect of the partnership. Your other questions will be dealt with at a later time.

Unless otherwise noted, all statutory references herein are to the Act.

Our comments

Subsection 152(1.5) requires the Minister to send a notice of the determination made under subsection 152(1.4) in respect of a fiscal period of a partnership to the partnership and to each person who was a member of the partnership during that fiscal period. On the other hand, subsection 244(20) deems each member of a partnership to have been provided with any notice or other document if the said notice or document was mailed to, served on or otherwise sent to the partnership either at its latest known address or place of business or at the latest known address of any of its members or, in the case of a limited partnership, any of its members whose liability is not limited.

Subsection 244(20) is stated to apply for all purposes of the Act. As the intention of subsection 244(20), according to the Department of Finance explanatory notes, is to provide “a more efficient manner in which to administer and enforce the Act”, we have no trouble concluding that it is intended to apply for the purposes of subsection 152(1.5), notwithstanding the slight discrepancy in the wording, i.e. the use of the word “send” in subsection 152(1.5) and the word “provided” in subsection 244(20). It is notable that a similar conclusion was arrived at in the recent Tax Court of Canada decision in Menzies (footnote 1), although that case was tried under the informal procedure and its precedential value is therefore limited.

As such, it is our view that subsection 244(20) relieves the Minister from its obligation to send a notice of determination to each person who was a member of the partnership during the fiscal period covered by the notice of determination where the notice of determination is mailed to, served on or otherwise sent to the partnership at the latest known address of the partnership.

For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library. A severed copy will also be distributed to the commercial tax publishers, following a 90-day waiting period (unless advised otherwise), for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity. Requests for this version should be e-mailed to: ITRACCESSG@cra-arc.gc.ca.

We trust that these comments will be of assistance, and thank you for your enquiry.

Dave Beaulne, CPA, CA
Section Manager
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader:  Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 2016 TCC 73.

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