CRA confirms that a pro rata distribution by an LLLP to its members is a dividend

CRA indicated that given that ss. 90(2) and (5) provided a comprehensive definition of what constituted a dividend (namely, a pro rata distribution on the shares of a foreign affiliate), pro rata distributions to its members by an LLLP or LLC that was a corporation for purposes of the Act would be treated as a dividend, including for disclosure in a T1134 supplement.

CRA further indicated that where the taxpayer does not have all the information required to fulfill the reporting requirements under Form T1134 in respect of its foreign affiliate, it should file the T1134 form on time, indicating clearly in the disclosure section of the T1134 that some information is missing. In this scenario, the availability of the due diligence exception under s. 233.5, or the reasonable efforts exception under s. 162(5), will depend on the facts of the transaction, and give rise to the requirements to file reasonable disclosure of the unavailable information to be reported in the T1134 return.

Neal Armstrong. Summaries of 17 May 2023 IFA Roundtable, Q.3 under s. 90(2) and s. 233.5.