In concluding that limited liability partnerships (“LLPs”) and limited liability limited partnerships (“LLLPs”) governed by the laws of Florida and Delaware were corporations, CRA referred to their “separate legal personality” and “the extensive limitation of liability afforded to all of their members,” and also stated:
[I]t has become widely accepted that U.S….LLCs…are properly viewed as corporations for the purposes of the Act, notwithstanding…Anson… . We see little substantive difference between LLPs, LLLPs and LLCs governed by the laws of the states of Florida and Delaware. …
We suspect that much of this reasoning may be applicable in respect of entities of other states of the U.S. and perhaps other foreign jurisdictions… .
Respecting transitional relief, CRA stated:
[W]e are prepared to accept that any such LLP or LLLP be treated as a partnership for the purposes of the Act, from its time of formation, where
- the entity is formed and begins to carry on business before July 2016;
- it is clear from the surrounding facts and circumstances that the members
- are carrying on business in common with a view to profit; and
- intended to establish an entity that would be treated for Canadian income tax purposes as a partnership and not a corporation;
- neither the entity itself nor any member of the entity has ever taken the position that the entity is anything other than a partnership for Canadian income tax purposes; and
- the entity converts, before 2018, to a form of entity that is generally recognized as a partnership for Canadian income tax purposes.
…[W]e will not generally accept partnership treatment for a Florida or Delaware entity that starts out as an LLC and then converts, under corporate continuance-like statutory provisions, to an LLP or LLLP where there is no significant substantive change to their legal context.