Guidelines for distinguishing joint venture from partnership
The guidelines set out in P-171R may be used to help determine the existence of either a joint venture or a partnership arrangement. However, they are not individually decisive and have no legal force. Also, they should be applied and weighed on a case-by-case basis having regard to the substance of the relationship.
The guidelines relate to the following factors:
- Are there two or more parties?
- What is the intention of the parties?
- Is the arrangement limited to a single undertaking or ad hoc undertaking?
- Is there a right of mutual control or management?
- What is the contribution by each participant?
- Is there joint ownership in the subject matter of the arrangement?
- Is there freedom to dispose of interests in the property?
- Is there the expectation of benefits or the presence of an "adventure"?
- Is there a limitation of liabilities?
- What is the income tax treatment?
- What is the format of the agreement?
GST status of joint venture in Quebec
The joint venture relationship is not recognized in Quebec civil law. Nevertheless, Quebec civil law does not prohibit the formation of a joint venture. Therefore, where an arrangement in Quebec is, according to the common law guidelines outlined above a joint venture and not a partnership, it will generally be regarded as a joint venture for GST/HST purposes.