Ontario Limited Partnerships (LPs) are an attractive option for entrepreneurs looking to set up a business in Ontario, Canada. They offer a number of benefits, including: Limited liability: General partners have unlimited liability for the debts and obligations of the LP, while limited partners are only liable up to the amount of their investment. Flexibility: LPs can […]
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Ontario Limited Partnership Formation Checklist
Ontario Limited Partnerships are a species of partnership in respect of which a declaration has been filed in accordance with the Limited Partnerships Act, LP Act). It must be formed between two or more persons and carry on a business in common with a view to profit. An Ontario Limited Partnership broadly resembles a general […]
Main rules governing the taxation of Canadian partnerships
Partnership not a person The Act imposes a tax on “persons”. A partnership is not a person, nor is it deemed to be one for purposes of the Act generally. Computation of partnership income The basic regime requires computation of income (or loss) at the partnership level and an allocation of the income (or loss) […]
Canadian Partnerships distinguished from other forms of joint ventures
While the Income Tax Act of Canada provides specific rules governing the manner in which a partnership is taxed, there are no rules that apply specifically to joint ventures. The terms“syndicate” and “association” are also sometimes used to describe a form of a joint venture that is not a partnership. Generally, the CRA’s position (supported […]
Classification of foreign business or investment vehicles as partnerships
The recognition of a business or investment vehicle as a partnership under the laws of a foreign jurisdiction or its classification as a partnership under foreign tax laws does not mean that it will be considered a partnership for purposes of the Act. According to the Canada Revenue Agency (CRA), the status of a foreign […]
What is Recognized as a Partnership for Purposes of the Income Tax Act?
Although the term “domestic partnership” is sometimes used in a tax planning context to describe a partnership constituted under the laws of a Canadian province and the term “foreign partnership” is used to refer to a partnership governed by foreign law, these terms have little relevance for Canadian income tax purposes. The Act does not […]
Limited partner status under the Income Tax Act
The treatment of a particular partner under the Act can vary depending on whether the partner is considered to be a “limited partner” as defined in the Act. Among other things, if a partner is a limited partner, specific at-risk rules apply to restrict the partner’s ability to deduct partnership losses For purposes of the […]
About The Partnership Agreement in an Ontario Limited Partnerships
When forming a new Ontario Limited Partnership, it is recommended that a partnership agreement, which is private between the partners, is entered into in order to set out the business activities of the Ontario Limited Partnership, the role and responsibilities of the partners and the manner by which partnership profits are drawn / losses allocated. […]
About Limited Partners in an Ontario Limited Partnerships
In an Ontario Limited Partnership, The Ontario Limited Partnership must also have a minimum of one Limited Partner, which may be an individual, corporation, trust or private foundation and need not be a Canadian resident. US Trusts are commonly used to good effect in this role. The Limited Partner details are not publicly disclosed and […]
About General Partners in an Ontario Limited Partnerships
In an Ontario Limited Partnership, “Ontario LP” The General Partner manages the affairs of the LP and will be liable for any debts of the LP. The General Partner will represent the LP in dealings with third parties. Natural persons, corporate entities and Trustees of Trusts may serve as General Partner. Where the General Partner […]
