CRA essentially repeated the points made in the 21 July 2017 Email of the CRA Delaware/Florida Working Group respecting grandfathering of existing LLPs/LLLPs.
CRA also declined to rule that a specific French SLP (Société de Libre Partenariat) was a partnership for ITA purposes. CRA stated:
The entity was to be created as a French SLP – which is a “Fonds Professionnel Spécialisé” – established as a “société en commandite simple” (“SECS”). A SECS is considered to be a “société commerciale” under French law, as is also the case for a “société en nom collectif”, “société à responsabilité limitée” and a “société par actions”.
CRA noted the following salient characteristics of an SLP established as a SECS [usually translated as "limited partnership"]:
- the existence of a separate legal personality that is recognized under the law of the relevant foreign jurisdiction – meaning the entity’s full legal capacity to acquire and own property, to sue and be sued, to carry on its own activities and to incur liabilities of its own;
- the limitation of liability afforded to all of its “limited members”;
- the unlimited liability of the “general member”; and
- the computation of earnings at the entity level, with a distribution mechanism akin to the declaration and payment of a dividend.
CRA went on to state:
The existence of a separate legal personality alone is generally not sufficient to distinguish certain foreign partnerships from Canadian partnerships. However, in our view, the absence of legal authority to support an effective entitlement to share profits and losses earned through the entity along with the other corporate like characteristics noted above, were sufficiently important in this case to conclude that this entity should not be treated as a partnership for Canadian tax purposes.