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(f) that “[t]he vendor is ... resident in Canada” - CRA stated:
The definition of “Canadian resident partnership” … is not relevant for the application of [subpara. 2(f)] … . Moreover, a limited partnership is not a person resident in Canada for the purposes of the Act (although it is deemed to be a separate person resident in Canada for limited purposes in subsection 96(1)) … .