9 November 2012 External T.I. 2012-0460471E5 - T5013 & non-Canadian partnership

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.

Principal Issues: Does a member of a partnership that is not a Canadian partnership have to file a partnership information return (i.e. T5013) where the only source of income of the partnership is interest from a loan made to a Canadian corporation?

Position: Yes if partnership carries on a business in Canada (or if SIFT partnership) unless exempt from filing under the administrative policy.

Reasons: Wording of subsection 229(1) of the Regulations unless exempt from filing under the administrative policy. It is a question of fact whether a partnership carries on a business in Canada.

XXXXXXXXXX
2012-046047
Chrys Tzortzis, CA

November 9, 2012

Dear XXXXXXXXXX:

Re: Requirement to File a Partnership Information Return

This is in response to your email inquiry sent August 27, 2012 in which you are inquiring whether a particular limited partnership is required to file a T5013 partnership information return. You state that the partnership is a limited partnership registered in Canada; however, it does not have a permanent establishment in Canada. You also state that its only source of income is interest from a loan made to a Canadian corporation.

Written confirmation of the tax consequences that apply to a particular fact situation is given by this Directorate only in the context of an advanced income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the CRA Web site at www.cra-arc.gc.ca. However, we are prepared to provide the following general comments, which may be of assistance.

Our Comments

Pursuant to subsection 229(1) of the Income Tax Regulations (the "Regulations"), every member, whether a resident or non-resident of Canada, of a partnership that carries on a business in Canada at any time in a fiscal period of the partnership shall make for that period an information return in prescribed form (i.e. the T5013 partnership information return). However, where a partnership does not carry on a business in Canada at any time in a fiscal period, no such return would be required to be filed for that period unless the partnership is a Canadian partnership [as defined in subsection 102(1) of the Income Tax Act (the "Act")] or a SIFT partnership [as defined in subsection 197(1) of the Act] at any time in that period. In addition, subsection 220(2.1) of the Act provides the Minister with the discretionary power to waive the requirement to file a prescribed form and the Minister has exercised this authority to exempt the members of certain partnerships from the requirement to file the T5013 partnership information return. As noted on the CRA Web site, the administrative policy on the requirement to file a partnership information return is as follows:

Effective January 1, 2011, a partnership that carries on a business in Canada, or a Canadian partnership with Canadian or foreign operations or investments, has to file a T5013 for each fiscal period of the partnership:

• If, at the end of the fiscal period,

o the partnership has an absolute value of revenues plus an absolute value of expenses of more than $2 million, or has more than $5 million in assets; or

• If, at anytime during the fiscal period,

o the partnership is a tiered partnership (has another partnership as a partner or is itself a partner in another partnership);

o the partnership has a corporation or a trust as a partner;

o the partnership invested in flow-through shares of a principal-business corporation that incurred Canadian resource expenses and renounced those expenses to the partnership; or

o the Minister of National Revenue requests one in writing.

In conclusion, we are unable to provide you with a definitive response to your enquiry given the limited information provided in your email. Further, the determination of whether a partnership carries on a business in Canada is a question of fact and can only be made after a review of all the facts of a particular situation. However, we trust that the above comments will be of assistance.

Yours truly,

G. Moore
for Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch