CRA indicates that the status of Delaware, NY and Florida LLCs as corporations is not affected by the Quebec residence of a member

A taxpayer’s representative submitted that Delaware, New York and Florida LLCs of which the taxpayer was a member should be treated as partnerships because the taxpayer was a Quebec resident and the attributes of an LLC were similar to those of a partnership under the Civil Code. CRA indicated that it was not convinced that an analysis of the Civil Code provisions pointed to this conclusion, but went on to state:

[I]f it were determined that such a comparative analysis supported the conclusion that a US LLC must be considered as a partnership for the purpose of application of the Act, we suggest that it would not be appropriate to adopt a classification approach to entities and foreign arrangements which could result in a different classification according to the province or territory of the residence (or permanent establishment) of the taxpayer holding an interest in the entity or the arrangement. …

[I]t appears to us, based in particular on the conflict of law rules, that the provincial and territorial laws of property and civil rights in Canada provide for mutual recognition of different types of entities or arrangements established under the respective jurisdictions of the various provinces and territories, thus providing an expanded base for analysis that is uniform across Canada for the purposes of applying the two-step approach.

Although the second sentence may be deliberately woolly so as to avoid outraging the Quebecer fans of bijuralism, it may be effectively saying that, just as Quebec recognizes, as a partnership, an entity of another province (say, Ontario) that satisfies the common law tests for partnerships, it should also recognize, as a corporation, a foreign entity which, in applying the two-step approach to entity classification, would be recognized as a corporation in Ontario.

Neal Armstrong. Summaries of 1 December 2015 Internal T.I. 2015-0588381I7Tr under s. 248(1) - corporation and Interpretation Act, s. 8.1.