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.
941750
XXXXXXXXXX T.B. Kuss
Attention: XXXXXXXXXX
October 25, 1994
Dear Sirs:
Re: U.S. Limited Liability Companies
Technical Interpretation
This is in reply to your letter dated June 29, 1994 requesting a technical interpretation regarding the Canadian income tax treatment of U.S. limited liability companies ("LLC's").
Presently the Department has reviewed the LLC legislation of four states - Florida, Wyoming, Delaware and Indiana. It is our opinion that an LLC organized under the applicable legislation of these states would be construed as a corporation, rather than a partnership, for Canadian tax purposes. The Department would maintain this view regardless of whether the LLC is treated as a corporation or a partnership for U.S. tax purposes.
If any LLC is treated as a partnership for the purposes of the Internal Revenue Code (the "Code") such that the shareholders ("partners") rather than the LLC are liable to tax under the Code on the income of the LLC, such LLC will not be considered to be a resident of the U.S. under paragraph 1 of Article IV of the Canada-U.S. Income Tax Convention (the "Convention"). If such LLC's mind and management is situated in Canada, it will be a resident of Canada for the purposes of paragraph 1 of Article IV of the Convention, paragraph 3 of Article IV of the Convention will not apply and subsection 250(5) of the Act will not apply. The LLC will not be a foreign affiliate but will be taxed under the Act as a resident of Canada.
Where the mind and management of the LLC is situated in the U.S. the LLC will be considered resident in the U.S. for Canadian tax purposes, however it will not be considered a resident of either contacting state under the Convention.
We hope our comments are of assistance.
Yours truly,
for Director
Reorganizations and Foreign Division
Rulings Directorate
Policy and Legislation Branch
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