Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: whether member of limited liability partnership is "limited partner"
Position: not if Act is amended as proposed
Reasons: proposed amendments to 40(3.14) and 96(2.4)
2000-002609
XXXXXXXXXX Denise Dalphy
(613) 957-9231
Attention: XXXXXXXXXX
June 5, 2000
Dear Sirs:
Re: Corporate Partner
We are writing in reply to your letter dated May 1, 1999 wherein you inquire about whether the conversion of a general partnership into a limited liability partnership would cause the partners to be limited partners under the Income Tax Act (the "Act").
Legislative proposals were announced on November 30, 1999 to amend, inter alia, subsections 40(3.14) and 96(2.4) of the Act. Paragraph (a) in each of these subsections of the Act is to be replaced with the following after 1997:
"(a) by operation of any law governing the partnership arrangement, the liability of the member as a member of the partnership is limited (except by operation of a provision of a statute of Canada or a province that limits the member's liability only for debts, obligations and liabilities of the partnership, or any member of the partnership, arising from negligent acts or omissions that another member of the partnership or an employee, agent or representative of the partnership commits in the course of the partnership business while the partnership is a limited liability partnership);"
Provided that the legislation that governs the relationship of a particular limited liability partnership only limits the liability of the partners of the limited liability partnership to the extent described in the words in parentheses in the above proposed legislation, and that the proposed legislation is enacted as above, such a partner would not be a "limited partner" as defined in the above subsections of the Act.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
Your deposit will be returned under separate cover.
Yours truly,
Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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