CRA declines to rule that a French SLP was a partnership

CRA essentially repeated the points made in the 21 July 2017 Email of the CRA Delaware/Florida Working Group respecting grandfathering of existing LLPs/LLLPs, namely:

• Respecting a requirement that the LLP/LLLP not take positions that are inconsistent with corporate treatment, CRA will accept the filing of a T2 return or of a T1134 or T106 (as well as obtaining a Business Number) based on the announcement at the 2016 IFA Conference that the LLPs/LLLPs were corporations.
• Respecting a requirement that there is no significant change in its membership or activities, this will not be considered to occur by virtue of a transfer of membership between parties not dealing at arm’s length or the issuance of additional memberships to them.
• The fact that the Delaware & Florida LLP or LLLP resulted from a previous conversion from an LLC would not by itself prevent accessing the grandfathering relief.
• The above relief will be applied to LLPs and LLLPs of other jurisdictions having similar (corporate) attributes where they were set up before April 26, 2017.

CRA also declined to rule that a specific French SLP (Société de Libre Partenariat) was a partnership for ITA purposes. Although it had separate legal personality, that was not sufficient to render it a corporation. However, there was no legal authority to support an effective entitlement on the part of the members to share profits and losses earned through the entity: the computation of earnings at the SLP entity level, with a distribution mechanism for its members akin to the declaration and payment of dividends, was found to be very relevant.

Neal Armstrong. Summary of 16 May 2018 IFA Roundtable, Q.8 under s. 96.