Partnership: Federal and Provincial Requirements

Partnerships are creatures of provincial law: the existence, formation, liability rules, and registration of a partnership are governed by the partnership statutes of the provinces and territories (and by the Civil Code in Quebec). The taxation of partnership income, GST/HST, and payroll deductions are governed principally by federal law. This page identifies, for a partnership, which requirements are federal and which are provincial or territorial, and how they vary across jurisdictions.

FEDERAL REQUIREMENTS

• Income Tax Act: computation of partnership income at the partnership level (section 96), allocation to partners, the T5013 Partnership Information Return, the at-risk rules for limited partners, and rollovers into and out of partnerships (sections 97 and 98).

• Excise Tax Act: GST/HST registration of the partnership as a person, collection and remittance of tax, and joint and several liability of partners.

• Canada Pension Plan and Employment Insurance: payroll deductions for employees; self-employed CPP for individual partners (QPP in Quebec).

• Federal regulation of specific sectors and statutes of general application, including the Competition Act and federal privacy legislation outside Quebec, Alberta, and British Columbia.

PROVINCIAL AND TERRITORIAL REQUIREMENTS

• Formation and nature of the partnership: the definition of partnership, the agency of partners, liability of partners to third parties, relations among partners, and dissolution are governed by the provincial partnerships act.

• Limited partnerships and limited liability partnerships exist only by compliance with the provincial statute; the availability, eligible professions, and scope of the liability shield of LLPs vary by province.

• Registration of the firm name and of limited partnership declarations with the provincial registry.

• Provincial income tax on each individual partner's share of income, at the rates of the partner's province of residence; provincial corporate tax for corporate partners, allocated by permanent establishment.

• Provincial sales taxes, employment standards, workers' compensation, payroll taxes, and professional regulation.

JURISDICTION-SPECIFIC REQUIREMENTS

• Newfoundland and Labrador: Partnership Act and Limited Partnership Act; registration with the Registry of Companies and Deeds; HST 15%.

• Prince Edward Island: Partnership Act; registration with Corporate and Business Services; HST 15%.

• Nova Scotia: Partnership Act, Partnerships and Business Names Registration Act, and Limited Partnerships Act; Registry of Joint Stock Companies with annual renewal; HST 14%.

• New Brunswick: Partnership Act, Partnerships and Business Names Registration Act, and Limited Partnership Act; Service New Brunswick; HST 15%.

• Quebec: Civil Code of Québec (general, limited, and undeclared partnerships); mandatory registration and annual updating declaration with the Registraire des entreprises; TP-600 information return; GST and QST with Revenu Québec.

• Ontario: Partnerships Act, Limited Partnerships Act, and Business Names Act; Ontario Business Registry with five-year renewal; LLPs available to authorised professions with a broad liability shield; HST 13%.

• Manitoba: The Partnership Act and The Business Names Registration Act; Companies Office; RST 7%.

• Saskatchewan: The Partnership Act and The Business Names Registration Act; Information Services Corporation; PST 6%.

• Alberta: Partnership Act (including limited partnerships and LLPs); Corporate Registry through registry agents; GST only.

• British Columbia: Partnership Act; BC Registries; PST 7%; Employer Health Tax.

• Yukon, Northwest Territories, and Nunavut: territorial partnership statutes and registries; GST only; payroll tax of 2% on employees in the Northwest Territories and Nunavut.

INTERPROVINCIAL OPERATIONS

• A partnership carrying on business in more than one jurisdiction must register its firm name, or file an extra-provincial limited partnership declaration, in each.

• An extra-provincial limited partnership must comply with the host province's statute in order for limited partners to retain limited liability in that province.

• Income allocated to corporate partners is apportioned among provinces according to the permanent establishments of the partnership.

• Employees of the partnership are governed by the employment standards and workers' compensation regime of the province in which they work.

SOURCES

• Constitution Act, 1867, s. 92(13) (property and civil rights).

• Partnership statutes of each province and territory; Civil Code of Québec, arts. 2186 to 2266.

• Canada Revenue Agency, Guide T4068; Income Tax Folio S4-F16-C1 What is a Partnership?