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Limited Partnership in Canada For Non-Residents
Limited Partnership in Ontario Ontario LP
Canada is a country with a comparatively strict system of taxation. Ordinary Canadian companies are liable to tax on all their worldwide income. Accordingly, they have no features attributable to tax-exempt or offshore structures.
As such, Canada has an image in the eyes of entrepreneurs and government bodies as a country with a standard system of taxation. Due to this, any structure established on Canadian territory is considered a highly prestigious vehicle.
However, Canadian legislation does offer the opportunity of registering and using Canadian enterprises with a zero rate of tax. These are known as Limited Partnerships. The L.P. is a limited partnership which has no less than two partners. One of the partners is a General Partner, whilst the other partners have the status of Limited Partners.
A Canadian L.P. with foreign members, which does not carry on a business in Canada and derives no income on Canadian territory, is not liable to tax in Canada. According to the Canadian tax laws, the L.P. is not considered as the separate subject of taxation. It is the founders (“Partners”) who should pay taxes from the profits received by the L.P. company in the place of their residence, in proportions according to the shares of interests belonging to them in the L.P. company, if it is stipulated by the legislation of that particular country.
Ontario LP Registration
TBA offers registration of Limited Partnerships in Ontario, Canada for non-Canadian residents.
Limited Partnerships is a simple form of business registration in Canada, which creates a Canadian company and does not generate filing and tax obligations in Canada for partners, who are not residents of Canada.
This form of business registration is extremely popular among software developers, web programmers, computer support specialists and IT service providers, who offer services to customers in Canada, US and Europe.
Ontario Limited Partnership
Limited Partnership is not considered as a taxable entity. Therefore, LP is not required to file corporate tax returns and pay income taxes.
All profit received by Limited Partnership passes through the company to its partners. Partners, who are not Canadian residents, do not have tax liabilities in Canada. If a partner is a Canadian resident, he is required to include his part of profit received through his Limited Partnership into his personal tax return and pay personal income tax.
There is no withholding tax on the profit passed to partners, who are non-Canadian residents.
There are no audit requirements for Limited Partnerships.
Filing of Financial Statements
Every Canadian L.P. must keep appropriate accounting records, and prepare a Financial Statement annually. Corporate Taxation Canada L.P. companies with non-resident partners which have no business activities in Canada; do not derive any income from Canada sources, and are managed and controlled outside of Canada, are exempt from Canada Federal and Provincial corporation taxes.
Canada Tax Treaties
Canada L.P. companies are not regarded as resident for tax purposes in Canada, and therefore are not entitled to take advantage of Double Tax treaties concluded by Canada with other countries.