ELIMINATION OF PARTNERSHIP TAX DEFERRAL
The recent Federal budget, introduced on March 22nd, and re-introduced on June 6th, proposes to eliminate the deferral of tax on partnership income allocated to a corporate partner. The proposed rules, which are extremely complex, and have a broad application, apply to taxation years of corporate partners ending after March 22, 2011.
Existing rules in the Income Tax Act allow for partnerships to be structured with a year-end that falls shortly after the year-end of a corporate partner. This provides for almost a year of tax deferral on the income recognition at the corporate partner level. This type of structure has become increasingly popular over the past few years as it provides absolute tax savings due to the phase-in of lower corporate tax rates.
To read more download the full Elimination of Partnership Tax Deferral below.
Download the full Elimination of Partnership Tax Deferral, October 17, 2011
