Update on ACB
Calculations in CRA’s New Partnership Information Returns
Latest notice from CRA in April 2013
Below is a notice recently added to the CRA website concerning partnership reporting, which advises taxpayers that the CRA is extending the transition provisions for Schedule 50 to the 2013 fiscal period. The website indicates that filers may use the 2011 T5013 forms (with no penalty) for the 2013 filing year. CRA has received many representations expressing concerns related to the requirements of this new form and has indicated to CICA that they will be consulting with stakeholders in the near future concerning changes to schedule 50.
To ease concerns about providing updated ACB and ARA information, we will accept returns filed by the due date if they contain the 2011 version (used for the tax year 2012 and 2013) of schedule 50 with complete information on partner identification and the annual transactions between partners and the partnerships.
In early February 2012, the Canada Revenue Agency (CRA) released the new T5013 Partnership Information Return and related guide. The new package has been designed to be more consistent in form to T2 returns, and most of the information needed to do the return has not changed. However, as previously mentioned, the new Schedule 50 (Partner’s Ownership and Account Activity) now contains a full adjusted cost base (ACB) calculation.
As many partnerships have not calculated ACBs for individual partners in the past, this may be very onerous to do in time to meet upcoming filing deadlines. And, it may not be possible for partnerships to obtain all of the necessary information to do an ACB calculation due to privacy issues. After discussions with the CRA, they have released a notice on February 29, 2012 that states:
- The CRA will accept returns filed by the due date if they contain either the 2010 or 2011 version of schedule 50 with complete information on partner identification and the annual transactions between partners and the partnerships.
- The CRA will not impose penalties on T5013 returns for 2011 fiscal periods as a result of incomplete ACB and ARA information on the schedule 50. The CRA goes on to state that they want to assure partnerships and tax preparers that penalties for incomplete returns are not intended to be applied on T5013 returns filed for 2011 fiscal periods that have been completed, to the best knowledge and abilities of the partnerships and preparers, by the filing deadline.
Please note that the CRA was advised that the software packages used by tax preparers will likely include all of the new forms, or alternatively, an older version will contain all of the old forms. So, using the new forms for everything except for schedule 50 may be difficult for larger partnerships with numerous partners. As a response to this issue, the CRA has stated in an email that although it is the CRA’s preference to receive 2011 versions of the forms, they will accept 2010 versions of the forms for all schedules.