CRA comments on US LLLPs

In 2014-0523041C6, the CRA was asked whether a US Limited Liability Limited Partnership (LLLP) should be treated a foreign partnership, a foreign corporation, or some other type of arrangement (for Canadian tax purposes).  The CRA applies a two-step process to characterize foreign business arrangements.  First, the characteristics of the foreign business association are examined under foreign commercial law, as well as any other relevant documents such as a partnership agreement or other contracts.  Second, these characteristics are compared with those of recognized types of business associations under Canadian commercial law, in order to classify the foreign business association under one of those categories.  The CRA said it had not previously considered the tax character of a US LLLP, but would do so in the context of an advance income tax ruling.  (In fact, the CRA has previously ruled that an LLLP was a partnership in a tower financing structure: see 2010-0386201R3, Ruling K.)