CRA finds that a non-resident partnership breaks a closely-related group connection for HST/GST purposes

Among other requirements for the HST/GST nil consideration election, those electing must be specified members of a "qualifying group" of corporations or Canadian partnerships which are closely related.  This means that two Canadian corporations which are sisters by virtue of being at the bottom of a wholly-owned stack of immediate Canadian and more remote U.S. corporations which, in turn, have a common US parent, will be eligible as members of a qualifying group.  However, if there instead is a US partnership in one of the two chains, this will break the required connection, so that the election is not available. It is implicit in this that partners of a partnership do not own partnership property including a corporate subsidiary.

Neal Armstrong.  Summary of 4 February 2014 Interpretation 159039 under ETA – s. 156(1) – qualifying group.