CRA finds that a partner in an upper-tier partnership is a member of the lower-tier partnership for branch tax purposes

CRA found that a non-resident corporate member of a holding partnership holding, in turn, an interest in an “opco” partnership carrying on a Canadian business would be considered for purposes of Reg. 808(4) to be a “member” of the opco partnership, so that its investment allowance for branch tax purposes would include its proportionate share (through the holding partnership) in the relevant Canadian assets of the opco partnership.

If CRA were willing to extend this accommodating position, it could be helpful in other contexts, for example, treating a limited partner of an upper-tier LP as a limited partner of the lower-tier LP, so that its share of lower-tier losses could qualify as a limited partnership loss of it. (See also Green.)

Neal Armstrong. Summary of 22 September 2017 External T.I. 2016-0632881E5 under Reg. 808(4)(b).