Articles
Anthony V. Strawson, "Should Partnership Information Returns be Filed as a Matter of Course?", Tax for the Owner-Manager, Vol. 9, No. 4, October, 2009, p. 4.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.4) | 0 |
Subsection 229(1)
Administrative Policy
17 May 2022 External T.I. 2021-0884651E5 - Cost Recovery Method in IT-426R (Archived)
A limited partnership with both resident and non-resident partners, but with its central management and control in Canada (so that it was a “Canadian resident partnership” as defined in s. 248(1)) sold a somewhat small (under 5%) shareholding of a US target company on terms that included an earnout. In finding that the partnership would not satisfy various requirements of IT-426R, para. 2 for use of the cost-recovery method, including the requirement of subpara. 2(e) - that “[t]he vendor submits, with his return of income for the year in which the shares were disposed of, a copy of the sale agreement” - CRA stated:
… T5013 forms … do … not constitute a return of income for the purpose of [subpara. 2(e)] … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | a limited partnership selling shares on an earnout basis cannot utilize the cost-recovery method | 383 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Canadian Resident Partnership | “Canadian resident partnership” is not a person “resident in Canada” | 143 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) | “Canadian resident partnership” is not a person “resident in Canada” (although it is resident for income computation purposes) | 160 |
31 May 2016 External T.I. 2016-0642011E5 - Functional currency election and partnerships
ACo and BCo are equal partners in a partnership. ACo has made a functional currency election under s. 261(3). The partnership books and records are kept in both Canadian dollars and the functional currency. what are the reporting obligations of the partnership? CRA responded:
As required by subsection 229(1) of the Regulations, if a foreign currency election is made pursuant to subsection 261(3) of the Act by a corporate partner, the partnership must file a T5013…and related summary and slips in the elected functional currency with the Canada Revenue Agency. … Separate T5013 slips in Canadian dollars must be prepared by the partnership and provided to the non-electing partner(s) but these slips are not to be filed with the Canada Revenue Agency.
T4068(E) Guide for the Partnership Information Return (T5013 Forms)
Exclusions from partnership filing obligations
Who has to file a partnership information return?
Under subsection 229(1) of the Regulations, all partnerships that carry on business in Canada or are Canadian partnerships or specified investment flow-through (SIFT) partnerships, must file a partnership information return. However, under CRA administrative policy, certain partnerships that carry on business in Canada or are Canadian partnerships are not required to file a partnership information return. …
Partnerships that carry on business in Canada and Canadian partnerships – A partnership that carries on a business in Canada, or a Canadian partnership with Canadian or foreign operations or investments, must file a return if either of the following occur:
- at the end of the fiscal period, 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;
- at any time during the fiscal period:
- the partnership is a tiered partnership (has another partnership as a partner or is itself a partner in another partnership), or
- the partnership has a corporation or a trust as a partner, or
- 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
- the minister of National Revenue requests one in writing
90 C.R. - Q32
Where a partner retires from a partnership that has a continuing right to an allocation of income under s. 96(1.1), or has a residual interest under s. 98.1 rather than a continuing income interest, the principle to be applied is that the partnership information return requires the reporting of allocations of income or losses to partners and changes to each partner's capital account.
88 C.R. - "Tax Reform and Tax Administration" - "Partnership Reporting"
Explanation of the need for the regulation.
IC 89-5R "Partnership Information Return"
Articles
Robert Cribb, Marco Chown Oved, "Snow washing: Canada is the world’s newest tax haven", Toronto Star, 25 January 2017
Filing exemption for provincially-formed partnerships which have no Canadian partners or Canadian business
Of greatest interest to foreign investors are Canadian limited partnerships (LPs): a corporate structure that has no tax filing requirements. Only the partners behind an LP have to file taxes, and if they’re not residents of Canada, no taxes are filed here at all.
“Canada is a horrible tax haven. Everybody is now switched over from using BVI companies and Cayman companies to Canadian LPs....” said Mark Morris, an independent tax consultant based in Zurich....
Reporting issue under study by Finance
“Canada is a new player in the world of offshore companies,” claims the website of a Swiss firm. “Canada is the most preferable destination for compliant tax planning since it has no negative offshore reputation and no association with tax avoidance or evasion. It is by far one of the best neutral jurisdictions, providing offshore benefits without any of the traditional offshore drawbacks.”
Federal Finance Minister Bill Morneau says his government sees this as an important issue and that he is working with his provincial colleagues to bring greater transparency to the corporate registration system.
“We as a government, and I personally, am committed to making progress on ensuring that we are not providing any haven for any inappropriate activities and that we’re having companies and individuals paying the share of tax that should be due,” he said in an interview.
Forms
T5013 FIN Partnership Financial Return
Subsection 229(4)
Administrative Policy
1 May 1990 T.I. (October 1990 Access Letter, ¶1484)
A partnership formed to pay the expenses incurred by a condominium building with respect to community property, and a "non-profit" partnership formed to acquire and maintain assets of the disposal of the community would not qualify for exemption.
Subsection 229(5)
Administrative Policy
5 October 2018 APFF Roundtable Q. 6, 2018-0768771C6 F - Determination for a foreign partnership
CRA’s position is that where the partners of a partnership are not required to file a T5013 (which would generally be the case if the partnership does not carry on a business in Canada, and is not a Canadian partnership or SIFT partnership), the CRA cannot make a partnership income or loss determination under s. 152(1.4). Instead, if CRA considers the partnership income or loss reported by a partner to be incorrect, it will assess the partner directly subject to the normal limitations under the general rules in s. 152(4). See also 2078970 Ontario and 2017-0734751I7.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.4) | CRA cannot make a partnership income or loss determination where the partnership has no T5013 filing obligation | 274 |