CRA indicates that deduction of foreign non-business tax paid by partnership is available to indirect individual member

In 2015-0572461I7, the CRA indicated that a Canadian resident individual who holds shares in disregarded LLCs through a Canadian LP and a US LP that has elected to be treated as a corporation for US tax purposes is entitled to a deduction under subsection 20(11) and/or subsection 20(12) of the Income Tax Act (Canada) for the US taxes paid by the US LP, provided that all requirements of these provisions are otherwise met. This appears to be a reversal of the CRA’s former administrative position that subsection 20(12) applies on a source-by-source basis.

Prepared by: Florence Sauve

Florence Sauve is a partner in the Toronto office of Thorsteinssons LLP. Florence’s practice focuses on all aspects of taxpayer representation and tax litigation and also includes personal and corporate tax planning.  She assists her clients in managing and resolving… more »