Tax Updates‎ > ‎

Joint Venture - New Policy

posted Oct 8, 2012, 1:36 PM by Margaret Lin CPA, CGA, CFP   [ updated Nov 16, 2012, 9:28 PM ]

Effective March 22, 2011, the Canada Revenue Agency (CRA) Policy for the reporting of income from a joint venture has changed. Prior to that date, in certain cases, the CRA allowed joint ventures to establish a fiscal period that differed from the tax year of the joint venture participants. The participants in these joint ventures were allowed to include in their income for a tax year the income earned by the joint venture for its fiscal period ending in the tax year. This policy has been discontinued.

As a result, for tax year ending after March 22, 2011, income from a joint venture is to be calculated for each participant taxpayer based on the participant taxpayer's tax year.

CRA’s revised administrative policy does not provide for a formulaic approach to compute stub period income for participant’s of joint ventures. Thus, actual income earned through joint ventures as calculated by each participant based on that participant’s fiscal period or taxation year is required.