In the past decade there has been an increase of Canadians purchasing real estate in the United States.  Many have based on the tax advice of US lawyers and accountants have chosen to invest using Limited Liability Limited Partnership (LLLP).


On May 26, 2016 the Canada Revenue Agency announced that a US LLLP and US Limited Liability Partnerships (LLP) would be classified as corporation for Canadian tax purposes.  This will have significant tax implications for Canadian taxpayers. The CRA understanding that this decision may create hardship for many taxpayers announced that short-term grandfathering provisions which will allow taxpayers to treat US LLLPs as partnerships providing the following conditions are met:


  1.  The LLLP or LLP was formed before July 2016 and it carried on business before that time.
  2. The taxpayers intended the LLLP or LLP to be classified as a partnership for Canadian tax purposes.
  3. The LLLP or LLP and each of its owners has treated the entity as a partnership for Canadian tax purposes and:
  4. The LLLP or LLP converts to an entity that the CRA recognizes as a partnership no later than 2018.


If you are involved in an LLLP or LLP you should be contacting your US tax advisor to discuss your situation to ensure that you stay onside.

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