CANADA REVENUE AGENCY 
 
INTERPRETATION BULLETIN 
 
NUMBER: IT-90 
 
DATE: February 9, 1973 
 
SUBJECT: INCOME TAX ACT 
What is a Partnership? 
 
REFERENCE: Section 96 
 
1. The Income Tax Act does not define a "partnership", but outlines the tax 
consequences if one exists. Section 102 defines what is meant by a "Canadian 
partnership", but presupposes that there is a partnership. A partnership is 
not a person, nor is it deemed to be within the meaning of the Act, 
notwithstanding that section 96 provides that the income of a member of a 
partnership is computed as if the partnership were a separate person resident 
in Canada. 
 
2. Generally speaking, a partnership is the relation that subsists between 
persons carrying on business in common with a view to profit. However, co-
ownership of one or more properties not associated with a business, (which 
under Common Law might be a joint tenancy or a tenancy in common), does not of 
itself create a partnership, and this is so regardless of an arrangement to 
share profits and losses. For guidance on whether a particular arrangement at 
a particular time constitutes a partnership, reference should be made to the 
relevant provincial law on the subject, and such law will be viewed as 
persuasive by the Department of National Revenue. 
 
3. A characteristic of a partnership is a sharing of profits of a business as 
opposed to a sharing of gross returns. Where the share of profits represents 
the payment of an obligation as opposed to a partnership right to so share, 
any presumption of partnership relating to the share of profits is rebutted. 
 
4. A joint venture agreement, whereby two or more persons agree that each 
provides his own property to perform a specific task and receives a specific 
division of profits from such a task, may be considered a partnership as 
regards such profits; but as long as the property is not held under joint 
tenancy or tenancy in common, it is not considered to be partnership property. 
Thus the capital cost allowance provisions relating to partnership property do 
not apply. 
 
5. Where several persons form an association for the purpose of carrying out 
particular business transactions in which they are mutually interested, the 
association has the characteristic of partnership. However, such persons may 
associate without each accepting total liability for the association's debts. 
In these circumstances, contracts may indicate that the associated persons 
will be liable only for their respective agreed portions of the debts. The 
existence of such an arrangement is viewed as an indication that a partnership 
does not exist. One of the original examples of this type of association which 
does not constitute a partnership is a syndicate of insurance underwriters. 
Associations or syndicates in connection with natural resource industries 
often are in the same category. 
 
6. Since a partnership is a relationship between persons carrying on business 
for profit, the type and extent of a person's involvement in the business is 
relevant in determining whether he is in reality a partner. 
 
7. Formal registration of a partnership or limited partnership is not in 
itself decisive because a declaration of this type does not prevail in 
partnership law over the actual facts of a situation. 
 
8. Any of the factors mentioned in this Bulletin are not necessarily decisive 
in themselves, but merely serve as objective criteria on which to base a 
decision on the existence or non-existence of a partnership.