The CRA has generally held that a loan from a partnership to a partner will reduce the ACB of the partner’s partnership interest because of the “all-encompassing” language in subparagraph 53(2)(c)(v) of the Income Tax Act (Canada). The CRA has made an exception where a partnership makes short term loans in a fiscal period that are eliminated by distributions “shortly” after the end of the period. A 2023 ruling (document 2022-0938261R3) provides comfort on a long-term loan by a limited partnership to an indirect partner, but the author suggests the comfort depends very much on the specific facts contemplated by the ruling.
Marc Pietro Allard “CRA Ruling Provides Guidance on Partnership Loans to an Indirect Partner” Canadian Tax Focus 16:2 (May 2026)
